Which audit procedure is primarily designed to identify unusual relationships or unexpected trends in financial information?
Correct answer: A. Analytical procedure
- A. Analytical procedure
- B. Physical inspection
- C. External confirmation
- D. Document examination
Explanation
Analytical procedures compare recorded amounts with expected relationships, trends, or ratios to identify unusual items. Physical inspection and confirmation obtain other forms of evidence but do not primarily analyse financial relationships.
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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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