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When planning for local government financial statement audit, what data source should the auditor consider first?
Importance of Prior Audit Findings:
When planning a local government financial statement audit, auditors should first review previous audit findings to identify recurring issues, control weaknesses, or non-compliance areas. This helps auditors focus on areas of higher risk and guides the development of an effective audit strategy.
Explanation of Answer Choices:
A . Government-wide financial statements: Important, but these are reviewed after identifying risk areas from prior findings.
B . Fund financial statements: These are part of the audit process but not the starting point for planning.
C . Reconciliations between fund financial statements: These are analyzed during the audit but come later in the process.
D . Previous audit findings: Correct. Reviewing past findings ensures the auditor addresses previously identified risks and compliance issues.
GAO, Government Auditing Standards (Yellow Book).
AICPA, Audit Planning and Risk Assessment Best Practices.