What must happen before planning the audit and implementing the phase of risk assessment?
A)The client acceptance or continuation decision has to be made
B)The risk response phase has to be completed
C)The reporting phase must be undertaken
D)The audit strategy must be planned

Question

Quizplus · Accepted Answer

Before planning the audit and implementing the phase of risk assessment, the auditor must first make a client acceptance or continuation decision, which involves evaluating whether to accept or continue an engagement with a particular client. This decision is based on factors such as the client's reputation, business and industry risks, and the auditor's independence and ability to perform the engagement. Only after this decision has been made can the auditor proceed with planning the audit strategy and conducting the phase of risk assessment. Therefore, choice A is the best answer. Choices B, C, and D are incorrect because they do not reflect the proper sequence of steps in the audit process. The risk response phase comes after risk assessment, the reporting phase comes after fieldwork and testing, and the audit strategy is developed as part of the planning phase, which includes risk assessment.

What Must Happen Before Planning the Audit and Implementing the Phase