Analytical procedures are those that:
A) assess the overall reasonableness of transactions and balances.
B) analyse the effect of management procedures on the accounting system.
C) review the effectiveness of internal control procedures.
D) evaluate the accuracy of the account balances.

Question

Quizplus · Accepted Answer

Analytical procedures are used to assess the overall reasonableness of transactions and balances by comparing them to expected results based on historical data or industry standards. It is a technique used by auditors to gain an understanding of the financial statements and identify potential risk areas that require further investigation. Option B is incorrect because analytical procedures are not used to analyse the effect of management procedures on the accounting system. Option C is incorrect because reviewing the effectiveness of internal control procedures is a separate audit technique. Option D is incorrect because analytical procedures are not used to evaluate the accuracy of the account balances, but to assess their reasonableness.

Analytical Procedures Are Those That