Question

The audit process involves numerous steps, four of which are listed below. What order do these...

The audit process involves numerous steps, four of which are listed below. What order do these steps occur within the overall audit process?

A. Perform tests of details

B. Form an opinion on the financial statements

C. Make a preliminary assessment of materiality and inherent risk

D. Perform tests of controls

CHOICES:

C, D, A, B

A, D, C, B

D, C, B, A

C, A, D, B

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Homework Answers

Answer #1

The order of the mentioned steps within the overall audit process is C, D, A, B.

Explanation:

  1. (C) Make a preliminary assessment of materiality and inherent risk: Initial step of auditing is to understand the client's business and assess its risks
  2. (D) Perform tests of controls: Test of controls are done to test the effectiveness of a control used by a client to prevent or detect material misstatements
  3. (A) Perform tests of details: Tests of details are used by auditors to collect evidence that the information & discolsures associated with a client's financial statements are genuine or correct
  4. (B) Form an opinion on the financial statements: Auditors will provide their opinion on the financial health and conduct of the client entity
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