There are many types of analytical procedures that the auditor can conduct during the planning stage of the financial statement audit.What is the purpose of calculating key ratios for the client's business and comparing them with industry averages?
A)to understand the client's industry and business
B)to assess going concern
C)to indicate possible misstatements
D)to reduce detailed tests

Question

Quizplus · Accepted Answer

Calculating key ratios for the client's business and comparing them with industry averages helps the auditor to understand the client's industry and business. This understanding is important in assessing the client's inherent risk, identifying potential misstatements, and designing appropriate audit procedures. It also helps the auditor to gain insights into the client's performance and operating trends relative to the industry, which can inform the audit strategy and planning.

There Are Many Types of Analytical Procedures That the Auditor