Which of the following is a correct statement regarding analytical procedures?
A) If an auditor identifies a possible misstatement in sales using analytical procedures, accounts payable will be the likely offsetting misstatement.
B) Auditors should also compare the results of their analytical procedures to budgets and industry trends.
C) If sales are overstated, the income statement will be incorrect, but the balance sheet will be correct.
D) If an analytical procedure uncovers an unusual fluctuation, the auditor must assume fraud is involved.

Question

Quizplus · Accepted Answer

This is a correct statement regarding analytical procedures. Auditors should compare the results of their analytical procedures to budgets and industry trends to identify possible misstatements. Option A is incorrect because the offsetting misstatement may not necessarily be in accounts payable, it could be in another account. Option C is incorrect because if sales are overstated, it may have an impact on the balance sheet as well. Option D is incorrect because an unusual fluctuation may indicate errors or other factors, not necessarily fraud.

Which of the Following Is a Correct Statement Regarding Analytical