Favorable results from analytical procedures may reduce the extent to which the auditor needs to test details of balances.

Question

Quizplus · Accepted Answer

When analytical procedures provide favorable results, it can indicate a lower risk of material misstatement, which can allow the auditor to rely more on these procedures and decrease the amount of testing required on details of balances. However, the auditor still needs to exercise professional judgment and consider other factors such as the nature of the assertion, the complexity of the account, and the possibility of fraud. Therefore, while analytical procedures can be useful in reducing the extent of testing, they cannot eliminate the need for testing altogether.

Favorable Results from Analytical Procedures May Reduce the Extent to Which