Analytical procedures are seldom used during the risk assessment stage of an audit engagement because they are substantive procedures.

Question

Quizplus · Accepted Answer

Analytical procedures are often used during the risk assessment stage of an audit engagement to identify areas of potential risk and to develop an overall understanding of the client's business and industry. Analytical procedures at this stage are considered to be preliminary or initial procedures and are used to assess the risk of material misstatement in the financial statements. These procedures are not substantive in nature and do not provide sufficient evidence to support the auditor's opinion on the financial statements.

Analytical Procedures Are Seldom Used During the Risk Assessment Stage