Analytical procedures are audit methods of evaluating financial statement accounts by studying and comparing relationships among financial and nonfinancial data. The primary purpose of analytical procedures conducted during the planning stages is to:
A)identify the appropriate schedules to be prepared by the client.
B)identify the types of errors or frauds that can occur in transactions.
C)identify unusual conditions that deserve additional audit effort.
D)determine the existence of unrecorded liabilities or overstated assets.

Question

Quizplus · Accepted Answer

The primary purpose of analytical procedures conducted during the planning stages is to identify unusual conditions that may indicate a higher risk of material misstatement in the financial statements. This can then inform the auditor's decision to allocate additional audit effort to areas of the financial statements that may contain a higher risk of material misstatement. While analytical procedures can be used to identify unrecorded liabilities or overstated assets, this is not the primary purpose of conducting analytical procedures during the planning stages.

Analytical Procedures Are Audit Methods of Evaluating Financial Statement Accounts