When performing audit data analytics (ADA) as a risk assessment procedure, _______.
A)the auditor will have first obtained an understanding of the entity and its environment
B)the auditor is yet to obtain an understanding of the entity and its environment
C)the auditor will work closely with client management to confirm which risk assessment procedures they would prefer the auditor conduct
D)the auditor should contact the prior auditor for assistance with this procedure

Question

Quizplus · Accepted Answer

Before conducting any audit procedure, including audit data analytics, the auditor must first obtain an understanding of the entity and its environment, which includes assessing the risks of material misstatement in the financial statements. This understanding will inform the auditor's selection and application of audit procedures, including ADA, to obtain sufficient and appropriate audit evidence. Therefore, choice A is the best option. Choices B, C, and D are incorrect because they do not reflect the proper sequence of audit procedures and responsibilities.

When Performing Audit Data Analytics (ADA) as a Risk Assessment