All of the following factors should influence the decision to investigate a variance except:
A) Frequency of occurrence.
B) Materiality of the variance amount.
C) The direction of the variance (favorable or unfavorable).
D) Capacity for management to control.

Question

Quizplus · Accepted Answer

The direction of the variance (whether it's favorable or unfavorable) should not be a factor in deciding whether to investigate a variance. All variances, whether they are favorable or unfavorable, may indicate potential issues with the accuracy or effectiveness of the underlying processes, and thus should be investigated based on other factors such as frequency of occurrence, materiality, and management's capacity for control.

All of the Following Factors Should Influence the Decision to Investigate