Final answer:
Analytical procedures are used near the end of an audit to help the auditor form an overall conclusion about the consistency of financial statements with their understanding of the entity.
Step-by-step explanation:
The correct answer is A. Analytical procedures. Analytical procedures are used near the end of an audit to help the auditor form an overall conclusion about whether the financial statements are consistent with their understanding of the entity.
These procedures involve analyzing the relationships and trends in financial data and comparing them to expectations based on the auditor's knowledge and understanding of the entity. The auditor may use ratios, percentages, comparisons to prior periods, industry benchmarks, or other techniques to perform the analytical procedures.
For example, if the auditor notices a significant increase in revenue compared to the previous year and the auditor's knowledge of the business suggests that the increase is unlikely, it may indicate a potential misstatement or error in the financial statements. This could prompt the auditor to conduct further investigation or request additional supporting documentation.