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Why it important to document the business objectives and strategies of the audit client and assess whether its performance meets these objectives? What are we trying to understand by seeing whether the performance meets the objectives of the audit client?
Is this not simply part and parcel of “know your client”?
Where’s the quote from? It could have different connotations if put into context
This is taken from the ans to the question 30 Bill 6/11 where an audit manager ignores assesing business risk and we are asked to critically evaluate what the manager has done in relation to audit planning
It would fit into an assessment of business risk (part of ‘know your client’)
Where the client has stated objectives and is failing to achieve those targets, there is the risk of either a motivation to manipulate or a loss of confidence on the part of those that knew the targets
But what are the reasons for the failure to achieve targets? Adverse trading conditions? (just as an example, but there could be any number of reasons)
Any of those abundant reasons could have the effect of putting the entity’s future at risk – that’s what business risks do!
So an early identification of the client’s business objectives and strategies and an assessment of whether the performance actually meets those objectives could be the way to an early warning of problems round the corner
OK?
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