Analytical procedures are substantive tests and, if the results of the analytical procedures are favourable, they will:
A) reduce the tests of transactions.
B) reduce the extent of tests of details of balances.
C) reduce all of the other tests.
D) reduce the extent of tests of controls.

Question

Quizplus · Accepted Answer

Analytical procedures are used to evaluate financial information by analyzing plausible relationships among both financial and non-financial data. If the results of analytical procedures are satisfactory, auditors may reduce the extent of tests of details of balances, as they have already gained reasonable assurance about the accuracy of the financial statements. However, tests of controls and transactions may still be required. Therefore, option B is the best choice as it correctly identifies the extent of tests that can be reduced by performing analytical procedures.

Analytical Procedures Are Substantive Tests And, If the Results of the Analytical