Substantive analytical procedures should not be used in the audit of property, plant, and equipment.

Question

Quizplus · Accepted Answer

Substantive analytical procedures can be used in the audit of property, plant, and equipment to provide assurance on the reasonableness and accuracy of the related account balances, such as depreciation expenses and accumulated depreciation balances. Some common substantive analytical procedures include comparing current-year balances with prior-year balances, comparing financial statements ratios with industry benchmarks, and trend analysis. However, these procedures should be used in conjunction with other substantive audit procedures, such as physical inspections and confirmations. Therefore, the given statement is false.

Substantive Analytical Procedures Should Not Be Used in the Audit