Question

Analytical procedures are required for which of the following?

1. tests of balances
2. client retention decision
3. internal control evaluation
4. audit planning

Answer 1

Analytical procedures are formally required during the audit planning phase and can help identify risks of material misstatement. They are not mandated for client retention decisions or internal control evaluations but may be employed informally. These procedures are critical for guiding the audit process. option4.

Step-by-step explanation:

Analytical procedures are essential tools in auditing and are required during the audit planning phase of an audit engagement. The main objective of these procedures is to assist auditors in understanding the business and its environment, to identify any risk of material misstatement in the financial statements, and to help them design the nature, timing, and extent of further audit procedures.

When it comes to tests of balances, analytical procedures are used as substantive tests to obtain evidence regarding the financial statement assertions. However, their use in client retention decision-making or as part of internal control evaluation is not specifically mandated, though they could be informally applied.

In summary, analytical procedures are formally required in the context of audit planning, which is a critical component of effectively guiding the direction of the audit process.

Answer 2

Analytical procedures are formally required during the audit planning phase and can help identify risks of material misstatement. They are not mandated for client retention decisions or internal control evaluations but may be employed informally. These procedures are critical for guiding the audit process. option4.

Step-by-step explanation:

Analytical procedures are essential tools in auditing and are required during the audit planning phase of an audit engagement. The main objective of these procedures is to assist auditors in understanding the business and its environment, to identify any risk of material misstatement in the financial statements, and to help them design the nature, timing, and extent of further audit procedures.

When it comes to tests of balances, analytical procedures are used as substantive tests to obtain evidence regarding the financial statement assertions. However, their use in client retention decision-making or as part of internal control evaluation is not specifically mandated, though they could be informally applied.

In summary, analytical procedures are formally required in the context of audit planning, which is a critical component of effectively guiding the direction of the audit process.