Analytical Procedures in Auditing Planning

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What is the primary purpose of analytical procedures in the planning stage of an audit?

To assess the risk of material misstatement

To identify unusual figures in the accounts

To understand the business and its environment (correct)

To evaluate the experience of top management

What type of data is used in analytical procedures?

Both financial and non-financial data (correct)

Only financial data

Only non-financial data

Neither financial nor non-financial data

When are analytical procedures compulsory in an audit?

Only during the review stage

Only during the planning stage

During both the planning and review stages (correct)

Not compulsory at any stage

What is the purpose of comparing figures to the industry and previous years in analytical procedures?

To help assess the risk of material misstatement Signup and view all the answers

What is the first step in performing analytical procedures?

Predict a figure based on a relationship Signup and view all the answers

What is the purpose of analytical procedures in highlighting unusual figures?

To focus the audit on them Signup and view all the answers

What is the primary purpose of performing analytical procedures during the audit process?

To assess the risk of material misstatement Signup and view all the answers

What is the main objective of risk assessment procedures?

To assess the risk of material misstatement Signup and view all the answers

What is an important aspect to consider when understanding the nature of the company?

The company's market overview Signup and view all the answers

Why is it important to evaluate the quality of company management during the audit process?

To identify potential risks and opportunities Signup and view all the answers

What is the purpose of asking questions about the company's business strategy during the audit process?

To formulate follow-up questions Signup and view all the answers

What is a key characteristic of a well-designed risk assessment procedure?

It is based on a thorough understanding of the company's business Signup and view all the answers

What is the primary objective of an audit?

To provide an opinion on whether the financial statements give a true and fair view Signup and view all the answers

What is the essential attitude an auditor should maintain when planning and performing an audit?

Professional scepticism Signup and view all the answers

What was the primary consequence of the Enron scandal and other corporate frauds?

Loss of confidence in the way companies were run and audited Signup and view all the answers

What is the primary purpose of the Sarbanes-Oxley Act 2002?

To restore confidence in the auditing profession Signup and view all the answers

What is the primary requirement for an auditor's opinion on financial statements?

The financial statements must give a true and fair view Signup and view all the answers

What is the primary ethical principle an auditor must comply with?

Compliance with applicable ethical principles Signup and view all the answers