Analytical procedures used when planning an audit should concentrate on
A) Weaknesses in the company's internal control activities.
B) Predictability of account balances based on individual transactions.
C) Management assertions in financial statements.
D) Accounts and relationships that can represent specific potential problems and risks in the financial statements.

Question

Quizplus · Accepted Answer

Analytical procedures used when planning an audit should concentrate on accounts and relationships that can represent specific potential problems and risks in the financial statements. This helps the auditor plan the audit effectively, identify areas that require further audit attention, and assess the overall risk of material misstatements in the financial statements. While weaknesses in internal control activities and management assertions are important considerations, they are not as relevant when planning the audit as identifying specific risks in the financial statements. The predictability of account balances based on individual transactions would be more relevant when conducting substantive procedures during the audit, rather than planning the audit.

Analytical Procedures Used When Planning an Audit Should Concentrate on