4915-3-5RQ AID: 1825 | 14/06/2013

Understanding of the Entity and its Environment

In understanding the entity and its environment, the auditor gathers knowledge about the following categories of information:

The type of industry of the clients concern.

Regulatory factor and other external factors of the concern.

The nature of the concern and its accounting policies.

Objectives, strategies, and business risks of the concern.

Measurement and review process of financial performance of the concern.

The system of internal control in the concern.