Question

The primary objective of procedures performed to obtain an understanding of the entity and its environment is to provide an auditor with:

a. knowledge necessary for risk assessment and audit planning
b. audit evidence to use in assessing control risk
c. a basis for issuing an opinion on the financial statements
d. an evaluation of the consistency of application of management's policies

Answer 1

The primary objective of obtaining an understanding of the entity and its environment is to provide the auditor with knowledge necessary for risk assessment and audit planning.

Step-by-step explanation:

The primary objective of procedures performed to obtain an understanding of the entity and its environment is to provide an auditor with knowledge necessary for risk assessment and audit planning.

The main purpose of obtaining an understanding of the entity and its environment is to equip the auditor with the requisite knowledge for risk assessment and to properly plan the audit.

This understanding is crucial for identifying the nature, timing, and extent of auditing procedures that need to be performed to achieve audit objectives. It ensures the auditor is aware of any potential issues that may impact the financial statements and allows for a tailored audit approach that manages risks effectively.

Therefore, the correct answer is a. knowledge necessary for risk assessment and audit planning.