Question

In the context of audits of financial statements conducted in accordance with auditing standards, to what extent is the use of analytical procedures required?

a) Analytical procedures are optional and can be used at the auditor's discretion.
b) Analytical procedures are mandatory and must be applied in all audits to a significant extent.
c) Analytical procedures are recommended but not required by auditing standards.
d) The use of analytical procedures is limited to specific industries and is not universally mandated.

Answer 1

In the context of audits of financial statements conducted in accordance with auditing standards, the use of analytical procedures is mandatory to a significant extent.

Step-by-step explanation:

In the context of audits of financial statements conducted in accordance with auditing standards, the use of analytical procedures is mandatory and must be applied in all audits to a significant extent. This is because analytical procedures are an essential part of the audit process and provide substantive evidence about the financial statements.

Analytical procedures involve evaluating financial information through analysis of relationships and trends, and comparing the information to expectations. They help auditors identify potential risks and anomalies in the financial statements and provide a basis for further audit procedures.

While the extent and nature of analytical procedures may vary depending on the circumstances of the audit, they are generally required to be performed in all audits to ensure the reliability and accuracy of the financial statements.