What is the first step an auditor should take when conducting an audit?

Defining the audit objective and scope is fundamental to the auditing process. This step establishes what the auditor aims to achieve and the extent of the audit. By clearly defining the objectives, the auditor can focus on specific areas of concern and tailor the audit approach accordingly. This upfront clarity is crucial as it informs all subsequent steps in the audit process, including the planning, execution, and reporting stages.

Setting the objective also helps in assessing risks and identifying what information needs to be collected. Furthermore, it aligns the expectations of stakeholders with the auditor's work. Without a well-defined objective and scope, an audit could lose direction, resulting in inefficiencies or failing to address key risks.

Gathering information from stakeholders is an important part of an audit, but it typically occurs after the objectives and scope have been established, allowing the auditor to ask targeted questions. Preparing the audit report comes at the culmination of the audit process, while conducting a follow-up audit occurs after the initial audit findings and recommendations have been addressed. Thus, defining the audit objective and scope is the necessary first step in a systematic and effective auditing process.