Analytical procedures can be used to examine the reasonableness of accounts payable and accrued expenses.

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Analytical procedures involve analyzing relationships and trends in financial data to identify significant fluctuations or anomalies. By applying analytical procedures to accounts payable and accrued expenses, auditors can evaluate the reasonableness of these balances by comparing them to historical data, industry benchmarks, or other relevant metrics. For example, if accounts payable have increased significantly from the prior year, the auditor may investigate whether the company has had to rely more heavily on trade credit due to cash flow issues or whether there are any potential misstatements in the accounts. Therefore, analytical procedures can be a useful tool for auditors to assess accounts payable and accrued expenses during the audit process.

Analytical Procedures Can Be Used to Examine the Reasonableness of Accounts