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.

Reference:

GAO, Government Auditing Standards (Yellow Book).

AICPA, Audit Planning and Risk Assessment Best Practices.