Question

Before releasing the audit report, which of the following would the auditor most likely do?

a. Issue a management letter.

b. Perform an analytical review.

c. Check on a schedule of partner rotation.

d. Estimate client fee for subsequent services to be performed.

Answer 1

The auditor would most likely perform an analytical review before releasing the audit report, as it is a crucial step in assessing the financial information and identifying significant fluctuations.

Step-by-step explanation:

Before releasing the audit report, the auditor would most likely perform an analytical review. This process involves evaluating financial information by studying plausible relationships among both financial and non-financial data. An analytical review is a substantive auditing procedure designed to assess an organization's financial health and detect any significant fluctuations that warrant investigation.

To address the additional questions regarding audits over a 20-year period:

• d. To determine how many audits are expected in a 20-year period, assumptions on the frequency of audits need to be made, for instance, if audits are annual, then 20 audits can be expected.
• e. The probability that a person is not audited at all depends on the audit risk model applied by the auditor or the regulatory environment.
• f. The probability that a person is audited more than twice would also require additional data on the audit frequency and the individual's risk profile.