Ben & Cat is a company which work in the hotelry industry. The company year end is 31 October 2018. You are an audit manager at KLONE, an audit organization, and you are now arranging the audit of Ben & Cat for the first time because Ben & Cat is a new customer to your business. Last week, you joined a planning meeting with the audit engagement team and finance director. You are analyzing the meeting minutes as part of the process of drafting the audit strategy document, as well as reviewing ISA 315 as follows: * ISA 315 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement requires auditors to obtain an understanding of the entity and its environment, including its internal control. * ISA 315 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement states "the auditor should perform risk assessment procedures to obtain an understanding of the entity and its environment, including its internal control. Required: Given the unprecedented challenges that firms in the hotel industry are experiencing as a result of the Covid-19 crisis, explain why obtaining an understanding of the entity and its environment in such a circumstance would be crucial for the auditor
Ben & Cat is a company which work in the hotelry industry. The company year end is 31 October 2018. You are an audit manager at KLONE, an audit organization, and you are now arranging the audit of Ben & Cat for the first time because Ben & Cat is a new customer to your business. Last week, you joined a planning meeting with the audit engagement team and finance director.
You are analyzing the meeting minutes as part of the process of drafting the audit strategy document, as well as reviewing ISA 315 as follows:
* ISA 315 Understanding the Entity and its Environment and Assessing the
Risks of Material Misstatement requires auditors to obtain an understanding of the entity and its environment, including its internal control.
* ISA 315 Understanding the Entity and its Environment and Assessing the
Risks of Material Misstatement states "the auditor should perform risk assessment procedures to obtain an understanding of the entity and its
environment, including its internal control.
Required:
Given the unprecedented challenges that firms in the hotel industry are experiencing as a result of the Covid-19 crisis, explain why obtaining an understanding of the entity and its environment in such a circumstance would be crucial for the auditor
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