Analytical procedures used in planning an audit should focus on
A) Reducing the scope of tests of controls and substantive tests.
B) Providing assurance that potential material misstatements will be identified.
C) Enhancing the auditor's understanding of the client's business.
D) Assessing the adequacy of the available evidential matter.

Question

Quizplus · Accepted Answer

Analytical procedures used in planning an audit are meant to enhance the auditor's understanding of the client's business. These procedures involve using analytical tools and techniques to evaluate financial information and identify financial trends, relationships, and ratios. This helps the auditor to better understand the client's business, risks, and internal controls, which in turn allows them to plan the audit effectively and efficiently. While analytical procedures may reduce the scope of tests, their primary purpose is to provide assurance that potential material misstatements will be identified. However, assessing the adequacy of the available evidential matter is not the primary focus of analytical procedures used in planning an audit.

Analytical Procedures Used in Planning an Audit Should Focus on