Question

Which of the following is a category of Audit Procedures?

a) Risk assessment
b) Inspection of tangible assets
c) Analytical procedures
d) Prior experience evaluation

Answer 1

Analytical procedures are a category of audit procedures used in the evaluation of financial information during an audit, differentiating from risk assessment and prior experience evaluation.

Step-by-step explanation:

The correct answer to the student's question is c) Analytical procedures. These are a category of audit procedures used by auditors to evaluate an organization's financial information by studying and comparing relationships among data. Unlike risk assessment, which is a process for identifying and evaluating risks of material misstatement, or prior experience evaluation, which helps an auditor use historical knowledge for planning the current audit, analytical procedures actively involve examining financial statement data. Inspection of tangible assets, while a part of the audit process, is more related to the verification of physical assets and not a category of procedures itself.

Answer 2

The correct answer to the question about a category of audit procedures is c) Analytical procedures. They involve examining relationships between financial data to identify inconsistencies or significant changes. Inspection and risk assessment are also audit components but are not the answer to the given question. Thus, the correct option is C.

Step-by-step explanation:

The question you've asked pertains to the different categories of audit procedures that auditors use when conducting an audit. The correct answer is c) Analytical procedures. This category includes techniques such as ratio analysis and trend analysis that auditors use to assess financial information. These procedures help them understand the relationships between different sets of data and identify any significant changes or inconsistencies that may indicate a risk of material misstatement.

Inspection of tangible assets and Risk assessment are also key components of the audit process. The inspection involves physically verifying the existence and condition of assets, while risk assessment determines how likely it is that the financial statements may be materially misstated.

Prior experience evaluation, while valuable, does not constitute a category of audit procedures.