Question.3634 - Discussion Topic:When performing an audit, auditors are especially concerned about engagement risk. For this reason, they perform many activities to reduce engagement risks. Further, the auditing standards require auditors to understand the client's business, its environments, and its internal controls when planning the audit so that they could better plan the nature, timing, and extent of the audit. Required:1. Discuss why the auditor would be concerned about engagement risk and identify two or more activities the auditors might perform to reduce engagement risk.2. You should also discuss two methods, with examples, by which an auditor could get an understanding of an audit client and its environments, and how this understanding could be used in planning the nature, timing, and extent of the audit.
Answer Below:
Auditors xxx Engagement xxxx Engagement xxxx is xxx possibility xxxx an xxxxxxxxx relationship xxxx a xxxxxx could xxxx their xxxxxxxxxx cause xxxx to xxxx money xx cause xxxx to xxxx legal xxxxxx Whittington xxxx Because xxxxxxxxxx risk xxxxxxxxxxx elements xxxxxxxxx the xxxxxxxx financial xxxxxxxxx the xxxxxxxxxxxx integrity xxx the xxxxxxxxxxx of xxxxx misstatements xxxxxxxx are xxxxxxxxx about xx A xxxx engagement xxxx may xxxx to xxxxxxxxxx audit xxxxx which xxxxx stain xxx auditor's xxxxxxxxxx and xxxx them xx legal xxxxxxx Whittington xxxx Actions xx Lower xxx Risk xx Engagement xxxxxxxxxx for xxxxxxxxx Clients xxxxxxxx evaluate xxx engagement xxxx prior xx accepting xx pursuing x client xx examining xxxx audit xxxxxxxx and xxxxxxxxxx background xxxxxx on xxx integrity xx the xxxxxxxxxx Whittington xxxx Engagement xxxxxxx Sending xxx engagement xxxxxxx lowers xxxxxxxxxx risk xx helping xx precisely xxxxxxx the xxxxxxx duties xxxxxxxxxxx and xxxxxxxxxxx It xxxx lessens xxx possibility xx misunderstanding xxx lawsuits xxxxxxxxxxx Pany xxxxxxxxxx for xxxxxxxxxxxxx the xxxxxx and xxxxx Environment xxxxxxxxx Industry xxx Regulatory xxxxxxxxxxxx By xxxxxxxxx industry xxxxx and xxxxxxxx situations xxxxxxxx can xxxxxx knowledge xxxxx the xxxxxxxx environment xx a xxxxxx Whittington xxxx For xxxxxxxx the xxxxxxx might xx asked xx become xxxxxxxxxx with xxxxx rules xx a xxxxxxxxxx client xxx knowledge xxxx auditors xx defining xxx scope xx audit xxxxxxxxxx and xxxxxxxxxxx important xxxx areas xxxxxxxx Control xxxxxxxxxxx Another xxxxxx auditors xxxxx is xx analyzing xxx client's xxxxxxxx control xxxxxxx Whittington xxxx Auditors xxxxxxxxx how xxxx the xxxxxxxx internal xxxxxxxx are xxxxxxx by xxxxxxxxxx walk-throughs xxx interviews xxxxxxx attention xxx be xxxxx to xxxx internal xxxxxxxx such xx those xx cash xxxxxxxxxx and xxxxxxx scheduling xxx scope xxx be xxxxxxxx accordingly xxxxxxxx can xxxxxxxxx audit xxxxxxx that xxx more xxxxxxxxxx to xxxxxxxxxx risks xx developing x thorough xxxxxxxxxxxxx of xxx client xxx its xxxxxxxxxxx This xxxx ensure xxxx the xxxxxx time xxx extent xx the xxxxx are xxxxxxxx altered xxxxxxxxxxxxxxxxxxxxx O x Pany x Principles xx Auditing xxxxx Assurance xxxxxxxx nd xx McGraw-Hill xxxxxxxxxMore Articles From Accounting
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