If analytical procedures provide evidence that interest expense is presented fairly, _______.
A)the auditor can appropriately limit the assurance needed from tests of details of transactions and related sample sizes when testing interest expense
B)the auditor can appropriately increase the assurance needed from tests of details of transactions and related sample sizes when testing interest expense
C)then there is no need for the auditor to audit any related accounts, such as notes payable
D)then the auditor should direct management to pay the associated expense

Question

Quizplus · Accepted Answer

When analytical procedures provide evidence that interest expense is presented fairly, the auditor can appropriately limit the assurance needed from tests of details of transactions and related sample sizes when testing interest expense. This is because analytical procedures provide a level of confidence in the accuracy of the account balance, which reduces the need for extensive testing. However, the auditor should not ignore other related accounts such as notes payable and should still perform other necessary audit procedures.

If Analytical Procedures Provide Evidence That Interest Expense Is Presented