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This assessment of internal control will be in

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Unformatted text preview: o ensure that the audit is conducted in an effective and efficient manner. In order to plan the audit properly, the audit team must make a preliminary assessment of the client’s business risks and determine materiality. The audit team relies on these judgments to then assess risk relating to the likelihood of material misstatements in the financial statements. In developing the audit plan, the auditor should be guided by the procedures performed to gain an understanding of the entity and the results of the risk assessment process. As part of the risk assessment process, the auditor mes25435_ch01_001-032.indd mes25435_ch01_001-032.indd 20 26/05/11 9:24 PM Confirming Pages Chapter 1 An Introduction to Assurance and Financial Statement Auditing 21 may conduct analytical procedures (such as ratio or trend analysis) to identify specific transactions or account balances that should receive special attention due to an increased risk of material misstatement. Audit planning should take into account the auditor’s understanding of the entity’s internal control syste...
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