When are auditors likely to encounter judgment problems in the use of analytical procedures?
A)Whenever the auditor places reliance on management's explanations for unusual fluctuations in account balances without first developing independent expectations
B)Whenever the auditor allows unaudited balances to unduly influence his/her expectations of current balances
C)Whenever the auditor fails to consider the pattern reflected by several unusual fluctuations when trying to explain what caused them
D)The auditor is likely to encounter judgment problems in each of the above instances.

Question

Quizplus · Accepted Answer

The auditor is likely to encounter judgment problems in each of the instances mentioned in choices A, B, and C. In choice A, relying solely on management's explanations without developing independent expectations can lead to incomplete or inaccurate analysis. In choice B, using unaudited balances as a reference point can result in expectations that are not representative of current balances. In choice C, failing to consider the pattern reflected by several unusual fluctuations can lead to incomplete or inaccurate analysis. As such, auditors should exercise sound judgment and maintain professional skepticism when performing analytical procedures.

When Are Auditors Likely to Encounter Judgment Problems in the Use