Performing Analytical Procedures During the Planning Process Allows the Auditor

question 101

Multiple Choice

Performing analytical procedures during the planning process allows the auditor to

• A)identify areas where client performance is inconsistent with its expectations
• B)develop an audit program to gather evidence regarding internal controls for relevant assertions in significant accounts
• C)schedule more time for substantive testing
• D)schedule more time for testing of controls

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period, ensuring that revenues and expenses are matched.

Short-Term Investments

Investments that are expected to be converted into cash, sold, or consumed within a year or within one business cycle, whichever is longer.

Converted Into Cash

Refers to the process of liquidating assets or investments to generate cash flow.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee without having control over those policies.