The audit team gathers information about a new client's business and industry in order to obtain:
A) an understanding of the clients internal control system for financial reporting.
B) an understanding of how economic events and transactions have an effect on the company's financial statements.
C) information about engagement risk.
D) information regarding whether the company is engaging in financial statement fraud.

Question

Quizplus · Accepted Answer

Gathering information about a new client's business and industry is necessary to understand how economic events and transactions have an effect on the company's financial statements, which is important for planning and executing the audit.

The Audit Team Gathers Information About a New Client's Business