Final answer:
Analytical procedures are evaluations of financial information that analyze relationships among both financial and non-financial data; they play a critical role in auditing and are not optional even with strong internal control systems.
Step-by-step explanation:
Analytical procedures are essential techniques utilized within accounting and auditing. They refer to the evaluations of financial information by analyzing plausible relationships among financial data and sometimes non-financial data. The correct answer to the student’s question is 1) are evaluations of financial information through analysis of plausible relationships among both financial and non-financial data. These procedures are not merely optional; they are a crucial part of the audit process and are required even when a system of internal control is strong.
Performing analytical procedures helps in understanding and scrutinizing the trends and ratios derived from financial statements and other relevant information. It can involve expectation development, conducting a detailed comparison, and investigating any discrepancies or unexpected variances that could indicate errors or fraudulent activity. These techniques form a significant part of the decision-making and critical thinking process as they enable a deeper understanding of the data and its implications.