Economics · Auditing - ISA 315

According to ISA 315 (Revised), 'Identifying and Assessing the Risks of Material Misstatement', which of the following statements correctly explain why a risk assessment must be carried out at the planning stage? 1. The risk assessment helps the audit team gain an understanding of the entity for audit purposes. 2. The risk assessment enables the audit senior to produce an accurate financial budget for the audit assignment. 3. The risk assessment forms the basis of the overall audit strategy and the detailed audit plan. 4. Once the risks are assessed, the firm can select audit team members with sufficient skill and experience to address those specific risks.