Knowledge of Business ensures cost auditors assess entity controls, IT environment and risks to shape audit approach. CAAS-104 requires cost auditors to acquire sufficient knowledge of the business, its processes and environment to identify events, transactions and practices that could significantly affect cost statements. Auditors must understand the entity's operations, governance, cost accounting policies, performance measures, internal controls, internal audit adequacy, IT systems and cost information systems. They must identify and assess risks of material misstatement at the cost statement and assertion levels, including fraud and related-party transactions, and adjust audit procedures accordingly.