Analytical Procedures Can Only Identify Which One of the Following

Compare capital expenditures with the clients capital budget. The various transactions that are embodied in the financial statements d.

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To identify possible deficiencies in the clients internal control over financial reportingb.

. Analytical procedures can replace tests of controls in gathering evidence to support the assessed level of control risk. Analytical procedures are more efficient but not more effective than tests of details and transactions. Considering the adequacy of the evidence gathered in response to unexpected balances identified in planning.

Analytical procedures can be used in which of the following ways. Perform a trend analysis of the ratio of depreciation expense to total depreciable long-lived tangible assets. Areas that may represent specific risk relevant to the audit.

Analytical Procedures at planning stage. That all disclosures that should have been included in the financial report have been included c. As a means of overall review near the end of the audit.

Analytical procedures range from simple comparisons to the use of complex models involving many relationships and elements of data. Here the auditor develops an expectation of an account balance or financial relationship. Develop an overall estimate of depreciation expense.

As a result they may identify the high-risk areas which they are not aware of and assist them in determining the nature timing and. ANALYTICAL PROCEDURES 461 ISA 520 AUDITING only or a combination of tests of details and substantive analytical procedures. Which of the following items tend to be the most predictable for purposes of analytical procedures applied as substantive procedures.

C enhance the understanding of a clientd both a and c Answer. Reassessing the factors that assisted the auditor in deciding on preliminary materiality levels and audit risk. Relationships involving income statement accounts After audit procedures are completed a partner of the CPA firm who has not been involved in the audit performs a second or wrap-up audit documentation review.

Analytical Procedures in Audit Process. These procedures can indicate possible problems with the financial records of a client which can then be investigated more thoroughly. The predictability of financial data from individual transactions c.

C In some instances other types of evidence may be reduced when analytical procedures indicate that an account balance appears reasonable. Inventory balance increase of 10 during the current period. As attention-directing methods when planning an audit at the beginning.

For planning analytical procedures significant unexpected differences suggest that the auditor will need to increase substantive procedures. Auditors need to use analytical procedures as risk assessment procedures at the planning stage to obtain an understanding of the client and its business environment. Identify each of these three stages and for each stage discuss the purpose of performing analytical procedures in that stage.

As substantive audit procedures to obtain evidence during an. Which of the following analyses might an auditor perform as part of preliminary analytical procedures. To verify that recorded assets are owned by the entity.

Solutions for Chapter 11 Problem 31MCQ. Analytical procedures are conducted at the risk assessment phase of the audit to a aid in the identification of riskb identify where fraud has occurred. Analytical procedures performed in the final review stage of an audit generally would include.

Performing analytical procedures generally follows this four-step process. Examine all corroborating evidence available d. Which of the following results of analytical procedures would most likely indicate possible unrecorded inventory.

Analytical procedures are used as substantive procedures when the auditor considers that the use of analytical procedures can be more effective or efficient than tests of details in reducing the risk of material misstatements at the assertion level to an acceptably low level. Analytical procedures are one of many financial audit processes which help an auditor understands the clients business and changes in the business and to identify potential risk areas to plan other audit procedures. Developing an independent expectation helps the auditor apply professional skepticism when evaluating reported amounts.

Which of the following best describes the role of analytical procedures near the end of the audit engagementa. Compare inventory turnover ratio with previous years. Assume that the financial statements contain material errors or fraud c.

Which one of the following analytical procedures would be most helpful in alerting the auditor to the possibility of obsolete inventory. Compare unit costs of inventory with previous years. B Any tests of details directed toward the same assertionSubstantive analytical procedures may also be c onsidered appropriate when tests of.

When testing for accuracy an auditor searches for evidence. When analytical procedures identify significant fluctuations or relationships that are inconsistent with other relevant information or that deviate from predicted amounts the auditor should a. Inventory turnover is 325 during the current year compared to 375 during the prior year.

A Analytical procedures are used to isolate accounts or transactions that should be investigated more extensively. To identify accounts that appear to be misstated with the intention of planning the nature timing and extent of other substantive. Similar industries and so on.

Compare gross margin percentage with previous years. Analytical procedures involve comparisons of different sets of financial and operational information to see if historical relationships are continuing forward into the period under review. Thus the objective of the procedures is to identify such things as the existence of unusual transactions and events and.

To verify that a recorded transaction or event took place and relates to the entity b. Material weaknesses in the internal control structure b. B For certain immaterial accounts analytical procedures may be the only evidence needed.

Withdraw from the engagement b. To assist the auditor in planning the nature timing and extent of. Medium There are three stages of the audit in which analytical procedures are performed.

Analytical procedures are an important part of the audit process and consist of evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data. Current ratio of 31 as compared to 51 for the prior year. Also indicate in which stages analytical procedures are required by current professional auditing standards.

Analytical procedures used in planning an audit should focus on identifying. 04 Analytical procedures are used for the following purposes. That transactions and events have been recorded at appropriate amounts d.

It includes comparison of financial information with. The objective for planning analytical procedures is to identify accounts with heightened risk of misstatement to provide a basis for designing and implementing responses to the assessed risks. Analytical procedures used in planning an audit ordinarily use data aggregated at a high level.

Analytical procedures can be more effective or efficient than tests of de-.

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