Risk Assessment Objective (10)

Question 1

How can analytical procedures also be used? (Substantive)

Answer 1

As a source of substantive audit evidence when their use is more effective

Question 2

How can analytical procedures also be used? (Detection)

Answer 2

Efficient that tests of detail in reducing detection risk for specific financial statement assertions

Question 3

Analytical procedures comparisons (period)

Answer 3

Prior periods

Question 4

Analytical procedures comparisons (budget)

Answer 4

Budgets and forecasts

Question 5

Analytical procedures comparisons (information)

Answer 5

Industry information

Question 6

Analytical procedures comparisons (estimates)

Answer 6

Predictive estimates (e.g. expectations)

Question 7

Analytical procedures comparisons (analysis)

Answer 7

Relationships between elements of financial (9e.g. ratio analysis)

Question 8

Analytical procedures comparisons (information)

Answer 8

Relationships between financial and non-financial information (e.g. payroll costs to number of employees)

Question 9

How can the auditor obtain an understanding of the entity and its environment

Answer 9

Audit must apply analytical procedures as risk assessment procedures

Question 10

What can application of analytical procedures assist?

Answer 10

Assessing the risks of material misstatement to determine the nature, timing and extent of further audit procedures