When Obtaining an Understanding of the Entity and Its Environment

question 23

Multiple Choice

When obtaining an understanding of the entity and its environment, the auditor should obtain an understanding of internal controls primarily to:

• A)identify areas of relatively high risk of misstatement and plan the audit accordingly.
• B)provide suggestions for improvement to the company.
• C)serve as a basis for setting audit risk and materiality.
• D)decide whether to perform an audit for the company.