Question

Analytical procedures must be used during which phase(s) of the audit?

A) 1.)Test of Controls
2.)Planning 3.)Completion
1.)Yes 2.)Yes 3.)Yes

B) 1.)Test of Controls
2.)Planning 3.)Completion
1.)No 2.)Yes 3.)Yes

C) 1.)Test of Controls
2.)Planning 3.)Completion
1.)Yes 2.)No 3.)No

D) 1.)Test of Controls
2.)Planning 3.)Completion
1.)No 2.) No 3.) No

Answer 1

Analytical procedures are used in all phases of the audit process: during planning to understand the business, during testing controls and substantive procedures to identify misstatements, and during completion for final review of financial statements.

Step-by-step explanation:

Analytical procedures are an essential part of the auditing process and must be used during various phases of an audit. These procedures can include the comparison of financial information with prior periods, forecasts, and industry standards to identify any unusual or unexpected trends or items.

When discussing in which phases of the audit analytical procedures must be used, the correct answer is: A) 1.) Test of Controls – Yes, 2.) Planning – Yes, 3.) Completion – Yes. Analytical procedures are employed during the planning phase to understand the client's business and to assist in identifying areas of potential risk. They are also used as a substantive test during the test of controls and substantive procedures phase to detect material misstatements at the assertion level. Lastly, during the completion phase, analytical procedures help auditors with the final review of the financial statements to ensure that they are consistent with the auditor's understanding of the business.