Question

d. Explain how a strategic understanding of the client’s business may increase the value of the audit service.

Answer 1

The auditor must have a thorough understanding of the client and its environment, includingthe client’s e-commerce technologies, industry, regulatory and operating environment, suppliers,customers, creditors, and business strategies and processes. This thorough analysis helps the auditoridentify risks associated with the client’s strategies that may affect whether the financial statementsare fairly stated. This strategic knowledge of the client’s business often helps the auditor identify ways to help the client improve business operations, there by providing added value to the audit function.

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