Question

Which of the following is not a typical analytical procedure for the completion of the audit?

a. Ratio analysis.

b. Common-size analysis.

c. Changes from the prior year.

d. All of the above would typically be used."

Answer 1

All options listed, ratio analysis, common-size analysis, and examination of year-to-year changes, are standard analytical procedures used in auditing to assess financial information and to flag potential areas of risk.

Step-by-step explanation:

In auditing, analytical procedures are critical tools used during the planning and completion stages to understand the client's business and to identify areas of potential risk. The options provided all represent typical analytical procedures:

• Ratio analysis involves comparing different figures from the financial statements to gain insights into a company's financial health.
• Common-size analysis converts items on the balance sheet and income statement to a common size to reveal trends and facilitate comparison with other companies.
• Examining changes from the prior year helps auditors understand significant or unexpected movements in financial statement items, which could be indicative of errors or fraud.

Therefore, the final answer: d. All of the above would typically be used is correct. Analytical procedures such as these provide auditors with a basis for making inferences and identifying potential areas of concern that warrant further investigation.