Once auditors understand the flow of transactions, _______.
A)they will use their knowledge of assertions to understand what can go wrong
B)they will use their knowledge of the client's legal history to understand what can go wrong
C)they are ready to issue a clean audit opinion
D)they should request the internal audit function begin the audit

Question

Quizplus · Accepted Answer

Understanding the flow of transactions is the first step in auditing. Once auditors have a clear understanding of the flow of transactions, they will use their knowledge of assertions to understand what can go wrong. The assertions are used to evaluate whether the financial statements are fairly presented and to identify potential misstatements. Therefore, option A is the correct answer. Option B is incorrect because the client's legal history is not directly related to the audit of financial statements. Option C is incorrect because issuing a clean audit opinion requires a thorough examination of the financial statements and supporting documentation. Option D is incorrect because auditors are responsible for performing the audit and cannot delegate this responsibility to internal auditors.

Once Auditors Understand the Flow of Transactions, _______