Analytical procedures are those that
A)evaluate the accuracy of the account balances.
B)evaluate financial information through analysis of plausible relationship.
C)review the effectiveness of internal controls.
D)analyze the effect of management procedures on the accounting system.

Question

Quizplus · Accepted Answer

Analytical procedures are used to evaluate financial information through analysis of plausible relationships. These procedures involve comparing current year financial data to prior period financial data, industry benchmarks and other relevant data to identify trends, patterns, and deviations that may indicate material misstatements in the financial statements. Analyzing the relationships between various financial data helps auditors to identify areas that may be at a higher risk of material misstatement, which can then enable them to design more effective audit procedures to detect and correct these misstatements.

Analytical Procedures Are Those That