Final answer:
Confirming account balances with external parties is not an assessment procedure to understand the entity and its environment; it is a substantive procedure used to obtain audit evidence.
Step-by-step explanation:
The auditor obtains an understanding of the entity and its environment to assess the risk of material misstatement in the financial statements. The procedures for this assessment include inquiring of management and others within the entity, observing the application of internal controls, and reviewing prior audit reports. However, confirming account balances with external parties is not one of these assessment procedures; it is actually a substantive audit procedure used to obtain audit evidence.
Indeed, gathering information from customers and other stakeholders, finding expert information, and doing a root cause analysis are techniques that can help in understanding the entity, but confirming account balances with external parties is a step that goes beyond the initial assessment phase to directly verify financial statement assertions. Therefore, the correct option for the procedure not used for understanding the entity and its environment is confirming account balances with external parties.