This blog post is the second in a series on risk assessment, a significant audit quality issue. View the first blog post here.
Anyone who owns a home has had some experience with lawn care. Maintaining a healthy lawn is easy when you have a lush field of bluegrass, but when things start to get patchy, that’s where the real work comes in. That’s when you have to get a good understanding of what is going on with your lawn and what might be causing the patches. Only then can you pick the right treatment.
Auditing a set of financial statements is no different. To perform an effective audit, you must first gain an understanding of your client and identify their specific financial reporting risks. Until these steps are complete, you have no basis for planning the rest of your audit procedures.