Final answer:
Auditors use various methods such as industry standards, Dun and Bradstreet reports, financial statement articulation, and client inquiries to determine the expected account balance and compare it with the actual balance.
Step-by-step explanation:
The analytical procedure used by an auditor to test the reasonableness of an account balance involves calculating the expected balance and comparing it to the actual balance recorded. The auditor can determine the expected account balance by several methods. Industry standards provide benchmarks and ratios that an auditor might use for this purpose. By analyzing Dun and Bradstreet reports, an auditor can compare the company's account balances with similar companies. Furthermore, the auditor can relate the balance to another account using financial statement articulation, which involves understanding how different financial statements are related to one another. The balance can also be clarified through inquiry of the client, which involves directly asking the client for explanations regarding certain balances. For example, if an auditor is looking at a bank's balance sheet, they might expect the cash balance to be a certain amount based on the bank's size and average daily transactions. If the actual balance significantly differs from what is expected, the auditor would investigate further.