The Preliminary Use of Analytical Review Procedures by the Auditor

question 11

Multiple Choice

The preliminary use of analytical review procedures by the auditor is

• A)required to identify areas of heightened risk
• B)optional in accordance with auditor judgment.
• C)only used when other planning procedures cannot be applied.
• D)used to assist the auditor in documenting internal control.

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Definitions:

Normal Balance

The side of an account (debit or credit) where increases in the account are recorded.

Financial Statement(s)

Documents that provide an overview of a business's financial condition, including balance sheet, income statement, and cash flow statement.

Permanent/Temporary

Categories of accounts in accounting, where permanent accounts have balances that are carried over into future periods, while temporary accounts are closed at the end of each accounting period.

Normal Balance

The side (debit or credit) of an account that is usually increased, indicative of the account type's nature in the accounting equation.