Question

In planning an audit of a new client, an auditor most likely would consider the methods used to process accounting information because such methods

a. Affect the auditor's overall materiality levels.
b. Assist in evaluating the planned audit assertions.
c. Influence the design of internal controls.
d. Determine the auditor's acceptable level of audit risk.

Answer 1

An auditor would consider the methods used to process accounting information because they influence the design of internal controls. This is crucial for identifying potential errors or fraud and planning the audit procedures effectively.

Step-by-step explanation:

In planning an audit of a new client, an auditor most likely would consider the methods used to process accounting information because such methods influence the design of internal controls. Understanding the methods of processing accounting information is fundamental in designing an audit approach that is both effective and efficient. The processing methods can indicate the strengths and weaknesses of a client's controls and also suggest which areas might be prone to errors or fraud.

An auditor's assessment of the internal controls helps to identify the types of potential errors or fraud that could occur, leading to the design of substantive tests and other audit procedures to detect such misstatements. Therefore, the methods used to process accounting information directly impact the design and implementation of internal controls, which are a critical component of the audit planning process.