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These individual transactions are grouped and

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Unformatted text preview: needed to develop and support that opinion? The auditor must first obtain a thorough understanding of the client, its business, and its industry. The auditor must understand the risks the client faces, how it deals with those risks, and what remaining risks are most likely to result mes25435_ch01_001-032.indd 17 26/05/11 9:24 PM Confirming Pages 18 Part 1 Introduction to Assurance and Financial Statement Auditing in a material misstatement in the financial statements. Armed with this understanding, the auditor plans procedures that will produce evidence helpful in developing and supporting an opinion on the financial statements. To understand this process intuitively, consider what financial statements are made of. From your financial accounting courses, you know that accounting systems capture, record, and summarize individual transactions. Entities, must design and implement controls to ensure that those transactions are initiated, captured, recorded, and summarized appropriately. These individual transactions are grouped and summarized into various account balances, and finally, financial statements are formed by organizing meaningful collections of those account b...
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