When Obtaining an Understanding of the Entity and Its Environment,the

question 7

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.