With the listed information below please create three questions, client perspective in planning for and preparing for the audit. List your questions below?

This chapter explained the manner in which auditors plan an audit, obtain an understand

-

ing of the client, assess risks of misstatements, and respond to those risks. To summarize:

1.

The audit process may be viewed as including the following six stages: (

a

) Plan the

audit; (

b

) obtain an understanding of the client and its environment, including inter

-

nal control; (

c

) assess the risks of misstatement and design further audit procedures;

(

d

) perform further audit procedures; (

e

) complete the audit; and (

f

) form an opinion

and issue the audit report.

2.

Investigating a potential audit client is essential because auditors want to avoid

accepting clients that have unscrupulous management. As part of their investigation,

the auditors are required to attempt communication with the predecessor auditors.

3.

In planning the audit, the auditors establish an understanding with the client, ordi

-

narily in writing through use of an engagement letter that makes clear the nature of

the engagement, any limitations on the work, and the responsibilities of the client.

During planning, auditors develop an overall audit strategy, which includes an

audit

plan. The audit procedures that are contained in the audit plan are designed around

the assertions of management, which are embodied in the financial statements and

the auditors' assessments of risks and controls.

4.

The auditors perform risk assessment procedures (including inquiries, analytical pro

-

cedures, observation and inspection, and other procedures) to obtain an understand

-

ing of the client and its environment. They plan their audit to provide reasonable

assurance that the financial statements are free from material misstatement, whether

caused by error or fraud.

5.

Auditors are particularly concerned about fraudboth fraudulent financial report

-

ing and misappropriation of assets. To identify fraud risks, the auditors have an

audit team discussion of potential fraud (as well as errors), make inquiries, perform

analytical procedures, and consider the presence of fraud risk factors. The auditors

react to fraud risks as they do to other risks of material misstatements, with an over

-

all response or a modification of the nature, timing, and extent of audit procedures.

Additionally, the auditors are required in all audits to perform procedures to address

the risk of management override of internal control.

6.

The auditors should apply the materiality concept, which recognizes that some mat

-

ters are important to the fair presentation of financial statements, while others are

not. Auditors arrive at a measure of materiality for planning purposes and disaggre

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gate it into tolerable misstatements for the various accounts. In evaluating findings,

auditors also use materiality. While the materiality measures for both planning and

evaluation include quantitative and qualitative considerations, the planning measure

emphasizes quantitative considerations, while the evaluation measure emphasizes

both quantitative and qualitative considerations.

7.

Auditors assess the risks of misstatement they have identified to design further audit

procedures. Further audit procedures include both tests of controls and substantive

procedures.