Which of the following is accurate regarding the comparison of client data?
A) Since budgets are only projections, auditors can ignore the differences between budgeted and actual results.
B) One approach to overcome the limitations of industry averages is to compare the client to one or more benchmark firms in the industry.
C) It is impractical to relate one account balance to another balance sheet or income statement account.
D) It is extremely difficult to get industry data for comparative purposes.

Question

Quizplus · Accepted Answer

Comparing a client to benchmark firms in the industry can provide more relevant and specific data than relying solely on industry averages. Budgeted results should not be ignored as they can provide insight into management's expectations and plans. It is also possible and common to relate one account balance to another balance sheet or income statement account. While obtaining industry data can be challenging, it is not impossible, and there are various sources available, such as industry associations, government statistics, and financial databases.

Which of the Following Is Accurate Regarding the Comparison of Client