Following are procedures used by auditors to understand likely sources of misstatements:
I. Identify controls that management has implemented to address potential misstatements.
II. Identify points within the process at which misstatements could arise.
III. Understand the flow of transactions.
The proper sequence of these steps is:

A) I, II, III.
B) III, II, I.
C) I, III, II.
D) III, I, II.

Question

Following are procedures used by auditors to understand likely sources of misstatements: 
I. Identify controls that management has implemented to address potential misstatements.
II. Identify points within the process at which misstatements could arise.
III. Understand the flow of transactions.
The proper sequence of these steps is:

A) I, II, III.
B) III, II, I.
C) I, III, II.
D) III, I, II.

Quizplus · Accepted Answer

The proper sequence is to first understand the flow of transactions (III), then identify points where misstatements could arise (II), and finally identify controls that management has implemented to address potential misstatements (I).

Following Are Procedures Used by Auditors to Understand Likely Sources