The basic assumption underlying the use of analytical procedures is:____________?
Correct answer: B. Relationship among data exist and continue in the absence of known condition to the contrary
- A. It helps the auditor to study relationship among elements of financial information
- B. Relationship among data exist and continue in the absence of known condition to the contrary
- C. Analytical procedures will not be able to detect unusual relationships
- D. None of the above. Compare Credit Cards
Explanation
Analytical procedures rely on the expectation that meaningful relationships among data generally continue unless a known change or contrary condition exists. An unexpected relationship therefore signals a possible misstatement or risk requiring further investigation.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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