Answered: During the planning phase of an audit…

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Accounting

During the planning phase of an audit client, Ana Alitick (auditor) utilises analytical procedures. These procedures

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter7: Planning The Audit: Identifying, Assessing, And Responding To The Risk Of Material Misstatement

Section: Chapter Questions

Problem 3RQSC

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Question

During the planning phase of an audit client, Ana Alitick (auditor) utilises analytical procedures. These procedures range from simple comparisons to the use of complex models involving many relationships and elements of data. The procedures also include comparisons of recorded amounts, or ratios developed from recorded amounts, to expectations developed by the auditors.
Required:

4) Name the four categories of financial ratios and give an example of a ratio in each
category. What is the primary information provided by each financial ratio category?
5) Describe the factors that influence an auditor’s consideration of the reliability of data for purposes of achieving audit objectives?

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Analytical procedures consist of evaluations of financial informationmade by a study of plausible relationships among both financial and nonfinancial data.They range from simple comparisons to the use of complex models involving manyrelationships and elements of data. They involve comparisons of recorded amounts, orratios developed from recorded amounts, to expectations developed by the auditors.a. Describe the broad purposes of analytical procedures.b. When are analytical procedures required during an audit? Explain why auditors useanalytical procedures extensively in all parts of the audit.c. Describe the factors that influence the extent to which an auditor will use the resultsof analytical procedures to reduce detailed tests in meeting audit objectives.*
An auditor is performing analytical procedure that involves developing common-size financial statements. This technique is referred as: Vertical analysis, Horizontal analysis, Cross-sectional analysis, or Comparison analysis
Auditors try to identify predictable relationships when using analytical procedures. Relationshiipss involvingtransactions fromwhich of the following accounts most likely would yield the highest level of evidence? a. accounts receivable b. interest expense c. accounts payable d. Travel and entertainment expense
Auditors try to identify predictable relationships when using analytical procedures. Relationships involving transactions from which of the following accounts would most likely yield the highest level of evidence? a. Accounts receivable. O b. Interest expense. O c. Travel and entertainment expense. O d. Accounts payable.
During the planning phase of an audit client, Ana Alitick (auditor) utilises analytical procedures. These procedures range from simple comparisons to the use of complex models involving many relationships and elements of data. The procedures also include comparisons of recorded amounts, or ratios developed from recorded amounts, to expectations developed by the auditors.Required: 1) What are the purposes of analytical procedures? (2) What are the situations in the audit when analytical procedures can be used3) What types of comparisons are useful when performing preliminary analytical procedures.
As the analytical procedures use comparisons and relationships to assess whether account balances or other data appear reasonable relative to the auditor's expectations . 1. The emphasis analytical procedures is: 2.Expectations developed by the auditor The accuracy of the data used by the auditor 3. Fairness of financial statements 4.Expectations developed by the high management of the client under audit
1. Please explain how to Evaluate the Data Reliability When Developing Expectations. The data an auditor will use to develop expectations in the acquisition and payment cycle has been deemed reliable by the audit staff. 2. Please Discuss the likely factors the audit team will consider when making this determination.
Which of the following best describes audit data analytics? Multiple Choice use of the financial statements as the primary source of data use of financial data to analyze reliability of audit evidence use of evidence to support the audit opinion in the audit report use of data visualization to identify patterns and anomalies 馬

Analytical procedures are generally used to produce evidence froma. Confirmations mailed directly to the auditors by client customers.b. Physical observation of inventories.c. Relationships among current financial balances and prior balances, forecasts, and nonfinancial data.d. Detailed examination of external, external-internal, and internal documents.
An example of an analytical procedure is the comparison of Results of a statistical sample with the expected characteristics of the actual population. O Computer generated data with similar data generated by a manual accounting system. Recorded amounts of major disbursements with appropriate invoices. O Financial information with similar information regarding the industry in which the entity operates.
Which of the following is an example of "other information" that could be used by an auditor as evidential matter supporting the financial statements? Worksheets supporting cost allocations. Accounting manuals. Special journals. Confirmation of accounts receivable.
Describe the users of audited financial statements and the decisions that they need to make based on reliable information. Please use the illustration below to help you answer this question.