Analytical procedures are best used as a substantive audit procedure in which of the following scenarios? a. The auditor's primary objective is to reduce audit costs to a minimum. b. Internal control risk is high, and therefore it is not efficient to test controls. c. Preliminary analytical procedures indicate that misstatements are likely to occur in significant account balances. d. Substantive analytical procedures would not be appropriate in any of the above scenarios.

Question

Haley Yates

Business

18 September, 08:11

Analytical procedures are best used as a substantive audit procedure in which of the following scenarios? a. The auditor's primary objective is to reduce audit costs to a minimum. b. Internal control risk is high, and therefore it is not efficient to test controls. c. Preliminary analytical procedures indicate that misstatements are likely to occur in significant account balances. d. Substantive analytical procedures would not be appropriate in any of the above scenarios.

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Kason Allison · Answer 1

d. Substantive analytical procedures would not be appropriate in any of the above scenarios.

Explanation:

Substantive analytical procedures are a type of audit procedure that is performed to address an identified risk of material inconsistencies of the significant account balances regarding its financial statements.

According to this statement, the option a. is wrong due to the auditor's primary objective to reduce audit costs. It would not be so useful to foster internal control efficiency (option b.) Misstatements are to be revised but are no likely to occur, then option C. is disqualified.