Which of the following statements is most closely associated with analytical procedure applied at substantive stage?
Correct answer: D. It helps to accumulate evidence supporting the validity of a specific account balance
- A. It helps to study relationship among balance sheet accounts
- B. It helps to discover material misstatements in the financial statements
- C. It helps to identify possible oversights
- D. It helps to accumulate evidence supporting the validity of a specific account balance
Explanation
At the substantive stage, analytical procedures provide audit evidence about whether a particular account balance appears reasonable by comparing it with an independently developed expectation. Studying relationships and identifying oversights are useful purposes, but they are less specific than this evidence objective.
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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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