There are three main reasons why the auditor should properly plan engagements: to enable the auditor to obtain sufficient appropriate evidence for the circumstances, to help keep audit costs reasonable, and to avoid misunderstandings with the client. Obtaining sufficient appropriate evidence is essential if the CPA firm is to minimize legal liability and maintain a good reputation in the business community. Keeping costs reasonable helps firm remain competitive. Avoiding misunderstandings with the client is necessary for good client relations and for facilitating high-quality work at reasonable cost.
Before beginning our discussion, we briefly introduce two risk terms: acceptable audit risk an inherent risk. These to risks significantly influence the conduct and cost of audits.
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