Audit planning begins with determining the requirements for the engagement. Of particular interest to the auditor is the reliability of the client's internal controls. Substantive testing is much more expensive than compliance tests.

1) Describe in your own words the major steps in the audit process.

2) Describe in your own words the nature of the risk assessment procedures that auditors use to understand the internal and external environmental factors that affect your client.

3) Discuss how the auditors design further audit procedures in response to the assessed risks.