Auditors must understand the flow of transactions in order to identify likely sources of financial statement misstatements.

Question

Quizplus · Accepted Answer

Understanding the flow of transactions is an essential part of an auditor's job to identify potential sources of financial misstatement. This understanding helps them to evaluate the design and effectiveness of internal controls and identify areas of high risk for further testing.

Auditors Must Understand the Flow of Transactions in Order to Identify