Question

Which of the following statements is not correct with respect to analytical procedures?

A) Auditing standards emphasize the need for auditors to develop and use expectations.
B) Analytical procedures must be performed throughout the audit.
C) Analytical procedures may be performed at any time during the audit.
D) Analytical procedures use comparisons and relationships to assess whether account balances appear reasonable.

Answer 1

The incorrect statement about analytical procedures in an audit is that they must be performed throughout the entire audit process. They are mainly performed during the planning and review stages, and optionally at other times as deemed suitable.

Step-by-step explanation:

The statement that is not correct with respect to analytical procedures used in audit is option B) 'Analytical procedures must be performed throughout the audit.' While analytical procedures are an important part of the auditing process, they are not necessarily required to be performed throughout the entire audit. They are typically performed during the planning stage to help determine the nature, timing, and extent of other auditing procedures, as well as during the review stage to assist in forming an overall conclusion about the financial statements. However, an auditor may also perform analytical procedures at other times if deemed appropriate.

To clarify:

• Option A) is correct, as auditors need to develop expectations to use as a basis for comparison when performing analytical procedures.
• Option C) is correct, as auditors may choose to perform analytical procedures at various times throughout the audit.
• Option D) is correct, as analytical procedures indeed involve using comparisons and relationships to assess the reasonableness of account balances.