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 xxx Pany xxxxxxx engagement xxxx encompasses xxxxxxxx including xxx client's xxxxxxxxx situation xxx management's xxxxxxxxx and xxx possibility xx major xxxxxxxxxxxxx auditors xxx concerned xxxxx it x high xxxxxxxxxx risk xxx lead xx inaccurate xxxxx views xxxxx could xxxxx the xxxxxxxxx reputation xxx land xxxx in xxxxx charges xxxxxxxxxxx amp xxxx nbsp xxxxxxx to xxxxx the xxxx of xxxxxxxxxx nbsp 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 xxx Pany 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 amp xxxx nbsp xxxxxxxxxx for xxxxxxxxxxxxx the xxxxxx and xxxxx Environment xxxx Reviewing xxxxxxxx and xxxxxxxxxx Requirements xx examining xxxxxxxx rules xxx economic xxxxxxxxxx auditors xxx obtain xxxxxxxxx about xxx external xxxxxxxxxxx of x client xxxxxxxxxxx amp 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 xxxx Internal xxxxxxx Assessments xxxxxxx method xxxxxxxx learn xx by xxxxxxxxx the xxxxxxxx internal xxxxxxx systems xxxxxxxxxxx amp 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 xxxx Auditors xxx establish xxxxx methods xxxx are xxxx responsive xx recognized xxxxx by xxxxxxxxxx a xxxxxxxx understanding xx the xxxxxx and xxx environment xxxx will xxxxxx that xxx nature xxxx and xxxxxx of xxx audit xxx properly xxxxxxx nbsp xxxxxxxxxxxxxxxxxxxxx O x amp xxxx K xxxx Principles xx Auditing xxx Other xxxxxxxxx Services xx ed xxxx McGraw-Hill xxxxxxxxx nbspMore Articles From Accounting
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