Assume That Application of Analytical Procedures Revealed Significant Unexplained Differences

question 3

Multiple Choice

Assume that application of analytical procedures revealed significant unexplained differences between recorded amounts and the expectations (estimates) developed by the auditor. If management is unable to provide an acceptable explanation, the auditor should:

• A)consider the matter a scope limitation.
• B)perform additional audit procedures to investigate the matter further.
• C)intensify the audit with the expectation of detecting management fraud.
• D)withdraw from the engagement.

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Definitions:

Event W

A specific occurrence or situation, often designated "W" for identification purposes in statistical or probabilistic contexts.

Probability

A numeric scale from 0 to 1 indicating how probable it is for an event to occur.

Outcomes

The possible results or consequences of an action, experiment, or process.

Classical Probability

Classical probability is a theoretical probability calculation based on the assumption that all outcomes are equally likely and there are a finite number of outcomes.