Final Answer:
Information to develop estimates for analytical procedures can be obtained from all of the following except d) Subsequent events.
Step-by-step explanation:
Analytical procedures serve as a vital tool for auditors in assessing the reasonableness of financial statements. These procedures involve comparing recorded financial data with expected amounts based on various factors.
While prior year financial statements (option a), industry benchmarks (option b), and management's future plans (option c) are legitimate sources for developing estimates, information from subsequent events (option d) should not be included.
Subsequent events are occurrences that take place after the balance sheet date but before the financial statements are issued. Since analytical procedures aim to predict balances or quantities based on data available up to the balance sheet date, incorporating information from subsequent events could distort the accuracy of these predictions.
It is crucial for auditors to rely on information available up to the specific period under audit, ensuring the reliability and relevance of analytical procedures in evaluating an entity's financial health.
Excluding subsequent events from the analytical process aligns with auditing standards, reinforcing the importance of assessing financial information within a specific timeframe. This approach enhances the precision of predictions and promotes the integrity of the audit process by focusing on information relevant to the audit period.
Question:
Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Information to develop this estimate can be obtained from all of the following except ________.
a) Prior year financial statements
b) Industry benchmarks
c) Management's future plans
d) Subsequent events