6-25 (LO6-2, 3) Mary Deming has been asked to accept an engagement to audit a sm

Question

6-25 (LO6-2, 3) Mary Deming has been asked to accept an engagement to audit a small financial institution. Deming has not previously audited a financial institution.

Required

Describe the types of knowledge about the prospective client and its environment that Deming should obtain to plan the engagement. Explain how Deming may obtain this knowledge. Discuss how this knowledge of the client and its environment will help Deming in planning and performing an audit in accordance with generally accepted auditing standards.

Explanation / Answer

1. Mary Deming should obtain following knowledge about the prospective client and its environment to plan the engagement of financial institution:

2. Mary Deming may obtain this knowledge by:

3. This knowledge will help in planning and performing audit in accordance with generally accepted auditing standards by:

-Thus, by knowing the knowledge about the prospective client and its environment, it may be very helpful in planning and performing the audit in accordance with the generally accepted auditing standards.

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