Auditors Often Use Analytical Procedures in Gathering Audit Evidence

question 86

Multiple Choice

Auditors often use analytical procedures in gathering audit evidence. For example, an unexplained decrease in the amount of accounts receivable may indicate:

• A) Sales were overstated.
• B) Inventory purchases were curtailed.
• C) Cost of Goods sold was overstated.
• D) Accounts Receivables were sold.

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Definitions:

Confidence Level

The probability that a statistical result is not due to chance, often expressed as a percentage.

Accuracy Level

The degree to which the result of a measurement, calculation, or specification conforms to the correct value or standard.

Sample Size

The number of observations or individuals taken from a population for the purpose of statistical analysis.

Sample Proportion

The sample proportion is a statistic that estimates the proportion of elements in a sample that have a particular attribute, characteristic, or outcome.