What are analytical procedures?
Question
What are analytical procedures?
Solution
Analytical procedures are techniques used by auditors to understand the business and its environment. They involve evaluations of financial information through analysis of plausible relationships among both financial and non-financial data. They range from simple comparisons to the use of complex models involving many relationships and elements of data. They are used in planning and performing the audit and for overall review of the financial statements. They also assist in identifying areas that may represent higher risks.
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What is the primary purpose of substantive analytical procedures in an audit?Option To obtain relevant and reliable audit evidence when forming an overall conclusion about the financial statements. To determine the suitability of analytical procedures for identified assertions. To evaluate the reliability of the data used to develop the auditor's expectation. To identify and assess the risks of material misstatement for planning purposes.
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