Question

The auditor obtains an understanding of the entity and its environment by performing all of the following assessment procedures except:

A) Inquiries of management and others.
B) Compute the level of detection risk.
C) Analytical procedures.
D) Observation and inspections.

Answer 1

The auditor obtains an understanding of the entity and its environment through assessment procedures such as inquiries, analytical procedures, and observations.

Step-by-step explanation:

The auditor obtains an understanding of the entity and its environment by performing various assessment procedures. These procedures include inquiries of management and others, analytical procedures, and observation and inspections. However, computing the level of detection risk is not an assessment procedure used to obtain an understanding of the entity and its environment. It is a concept used in the overall audit planning process.