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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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This note was uploaded on 12/08/2012 for the course ACCT 564 at Washington University in St. Louis.