Analytical procedures may be classified as being primarily which of the following?
A)Tests of controls.
B)Substantive procedures.
C)Tests of ratios.
D)Detailed tests of balances.

Question

Quizplus · Accepted Answer

Analytical procedures are primarily used as substantive procedures to obtain evidence about the completeness, accuracy, and validity of account balances. They involve the analysis of significant ratios and trends in financial and non-financial data, and the investigation of fluctuations and relationships that are inconsistent with other relevant information or which indicate possible errors or fraud. Tests of controls are designed to evaluate the effectiveness of internal controls, while detailed tests of balances involve the examination of individual transactions and account balances to provide direct evidence about their accuracy and completeness. Tests of ratios may be used in conjunction with analytical procedures, but they are not the primary classification of analytical procedures.

Analytical Procedures May Be Classified as Being Primarily Which of the Following