Why does the auditor need a good understanding of the auditee’s business and environment?
Answer to relevant QuestionsHow do changes in the economic environment affect a business’s risks? What official documents and authorizations should an auditor read when performing preliminary analytical procedures? What do you think is the best objective evidence of the reasonableness of an accounting estimate? Use the allowance for doubtful accounts receivable as an example.What audit planning activities are documented in the overall audit strategy? Is anything questionable about the relationship between retained earnings and income for the Anycompany data shown in Exhibit?
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