Which statement is incorrect regarding obtaining an understanding of the entity and its environment?Select one:a.The auditor's primary consideration is whether the understanding that has been obtained is sufficient to assess the risks of material misstatement of the financial statements and to design and perform further audit procedures.b.That understanding establishes a frame of reference within which the auditor plans the audit and exercises professional judgment about assessing risks of material misstatement of the financial statements and responding to those risks throughout the audit.c.Obtaining an understanding of the entity and its environment is an essential aspect of performing an audit in accordance with PSAs.d.The depth of the overall understanding that is required by the auditor in performing the audit is equal to that possessed by management in managing the entity.

Which of the following is correct statement?Select one:a.The auditor should use professional judgment to assess audit risk and to design audit procedures to ensure it is eliminated.b.The auditor is an insurer, and his or her report constitutes a guarantee.c.The subsequent discovery that a material misstatement exists in the financial statements is evidence of inadequate planning, performance, or judgment on the part of the auditor.d.The auditor should obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach.

Explain how auditors obtain an initial understanding of the entity, its environment and the applicable financial reporting framework.

When preparing the audit plan, the auditor must ensure that they acquired significant understanding of the entity, its environment, and its internal controls.Group of answer choicesTrueFalse

The auditor should perform the following risk assessment procedures to obtain an understanding of the entity and its environment, including its internal control, except:Select one:a.Inquiries of the entity's external legal counsel or of valuation experts that the entity has used.b.Observation and inspection.c.Inquiries of management and others within the entity.d.Analytical procedures.

In conducting an audit of financial statements, the overall objectives of the auditor are:I : To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework;II : To report on the financial statements, and communicate as required by the PSAs, in accordance with the auditor's findings.Select one:a.Both I and IIb.Neither I nor IIc.II onlyd.I only