Analytical procedures performed in the overall review stage of an audit suggest that several accounts have unexpected relationships. The results of these procedures most likely would indicate that:
A)fraud exists within the relevant accounts.
B)internal control activities are not operating effectively.
C)additional tests of details are required.
D)the communication with the audit committee should be revised.

Question

Quizplus · Accepted Answer

The unexpected relationships detected during the analytical procedures in the overall review stage of an audit suggest that there may be material misstatements or errors in the financial statements. As a result, additional tests of details are required in order to investigate and establish the reasons for these unexpected relationships. These tests are necessary to determine whether the misstatements or errors are due to fraud, errors, or omissions in the financial statements. Therefore, option C is the best response. The other choices are not necessarily implicated by the results of analytical procedures in the overall review stage of an audit. For example, the existence of fraud cannot be determined solely by analytical procedures, and internal control deficiencies may not necessarily cause unexpected relationships in the financial statements.

Analytical Procedures Performed in the Overall Review Stage of an Audit