If no material differences are found using analytical procedures, and the auditor concludes that misstatements are not likely to have occurred:
A) the number or extent of tests of details of balances may be reduced.
B) it will be necessary to increase the tests of transactions.
C) it will be necessary to increase the tests of balances.
D) it will not be necessary to perform tests of balances.

Question

Quizplus · Accepted Answer

If no material differences are found using analytical procedures, and the auditor concludes that misstatements are not likely to have occurred, the auditor can reduce the number or extent of tests of details of balances. This is because analytical procedures provide evidence on the reasonableness of account balances and transactions, and if they are effective in detecting material misstatements, then fewer tests of details are needed.

If No Material Differences Are Found Using Analytical Procedures, and the Auditor