For an auditor to make the decision about whether a change noted in analytical procedures is unreasonable he needs
A)knowledge of the client's industry
B)knowledge of current political conditions
C)knowledge of prior economic conditions
D)an understanding of the client's competitors
E)an understanding of the business under audit
F)both A and E
G)both B and C

Question

Quizplus · Accepted Answer

Analytical procedures involve comparing financial information with expectations based on the auditor's understanding of the client's industry and business. Therefore, knowledge of the client's industry (choice A) and an understanding of the business under audit (choice E) are essential for making decisions about whether a change noted in analytical procedures is unreasonable. Choices B, C, and D are not directly related to making this decision.

For an Auditor to Make the Decision About Whether a Change