An Important Purpose of Preliminary Planning Is to Highlight Potential

question 16

Essay

An important purpose of preliminary planning is to highlight potential problem areas or risk factors in the audit because some of these risk factors will have a broad impact on the reliability of the financial statements whereas others have an impact on individual transactions or accounts. What procedures are helpful to the auditor in identifying potential problems at the preliminary planning stage?

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Definitions:

Stratification

The division of society into levels, classes, or categories based on factors like wealth, power, prestige, or other resources.

Relative Deprivation

A condition or feeling experienced when a person or group believes they are worse off compared to some standard or to other groups.

CEO

Chief Executive Officer, the highest-ranking person in a company or other institution, ultimately responsible for making managerial decisions.

Federal Government

Defines a system of government where power is divided between a central authority and constituent political units (such as states or provinces).