When planning for local government financial statement audit, what data source should the auditor consider...

Importance of Prior Audit Findings:

When planning a local government financial statement audit, auditors should first reviewprevious audit findingsto 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.

References:

GAO,Government Auditing Standards (Yellow Book).

AICPA,Audit Planning and Risk Assessment Best Practices.