Week 2 - Planning - Understanding the Business Flashcards
1
Q
Define ISA315
A
Identifying and assessing the risks of material misstatement through understanding the entity and its environment
2
Q
What is the objective?
A
To identify and assess the risks of material misstatement, whether due to fraud or error, in the financial statements, through understanding the entity and its environment, including the entity’s risk assessment process, information system and control activities
3
Q
What does this provide a basis for?
A
Provides a basis for designing and implementing responses to the risks
4
Q
Why does the auditor need to understand the business?
A
Commercial awareness, economic issues
5
Q
What does the auditor need to understand?
A
Business culture, demands… everything about the business
