Question
Q6: PCAOB Auditing Standard No. 12 directs auditors to use a top-down approach to assess risk by first obtaining an overall understanding of the company
Q6: PCAOB Auditing Standard No. 12 directs auditors to use a top-down approach to assess risk by first obtaining an overall understanding of the company and its environment and then working down to the individual accounts and assertions. Why do you think the PCAOB recommends this approach? Did you find this approach useful when completing the case?
For an account (or assertion) where you assessed inherent risk to be high, how would this impact the level of control testing? How would the combined assessments of inherent risk and control risk impact substantive audit procedures?
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