ICAEW ARF · Chapter 3 · Question 9 of 13
What is the main purpose of performing analytical procedures at the planning stage of an audit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) To help identify unusual changes or relationships that may indicate risks of material misstatement
Explanation
Analytical procedures are required as risk assessment procedures because they help the auditor understand the entity and highlight balances that are out of line with expectations. These areas can then be targeted for further work. They are not designed at planning to provide substantive evidence or to check arithmetic.
More Planning, materiality and risk assessment MCQs
- Q11Which of the following is NOT a risk assessment procedure used to obtain an understanding of the entity and its environment?
- Q12A client's revenue has risen by 10% while its cost of sales is unchanged, so the gross margin has risen from 30% to approximately 36.4%…
- Q13Which of the following would be included in the detailed audit plan rather than the overall audit strategy?
- Q1Which of the following is NOT an objective of planning an audit?
- Q2Audit risk is a function of inherent risk, control risk and detection risk. Which of these can the auditor directly influence?