What is the primary objective of analytical procedures performed during the planning stages of an audit quizlet?

(a) If Post discovers that General's financial statements may be materially misstated due to the existence of frauds, Post should consider the implications for other aspects of the audit and discuss the matter and approach to further investigation with an appropriate level of management that is at least one level above those involved with the frauds. Post should also attempt to obtain sufficient competent evidential matter to determine whether, in fact, material frauds exist and, if so, their effect. Post may suggest that General consult with its legal counsel on matters concerning questions of law.

(b) If Post is precluded from applying necessary procedures, Post should disclaim or qualify an opinion on the financial statements and communicate these findings to General's audit committee or its board of directors. Post should also consider resigning from the audit.

(c) If Post concludes that General's financial statements are materially affected by frauds, Post should insist that the financial statements be revised and, if they are not, express a qualified or an adverse opinion on the financial statements, disclosing all the substantive reasons for such an opinion. Additionally, Post should adequately inform General's audit committee or its board of directors about the frauds.

Generally accepted auditing standards (GAAS) give auditors considerable discretion to decide the amount of work required to satisfy auditing standards guiding internal control evaluation and related audit planning. Which of the descriptions below best expresses the minimum amount of work permitted by GAAS for nonpublic companies?
A) Do not obtain an understanding of client environment, accounting, or control activities. Do not document the decision to assess control risk at maximum. Perform 100% substantive audit on all financial statement transactions and balances.
B) Obtain an understanding of client environment, accounting, and control activities. Document the decision to assess control risk at maximum. Perform an extensive but not 100% substantive audit on financial statement transactions and balances.
C) Obtain an understanding of client environment, accounting, and control activities, and perform detail tests of controls. Document the decision to assess control risk below the maximum. Perform restricted substantive audit on financial statement transactions and balances, considering the control risk assessment.
D) Obtain an understanding of client environment, accounting, and control activities, and perform detail tests of controls. Document the decision to assess control risk at zero. Perform no substantive audit on financial statement transactions and balances, since zero control risk means that no errors or fraud can reach the accounts.

In the revenue and collection cycle, the order of the activities in the cycle is best illustrated by:
A) delivering goods, billing customer, granting credit, and performing collection activities.
B) customer ordering, delivering goods, granting credit, and billing customers.
C) processing customer orders, granting credit, delivering goods, and billing customers.
D) granting credit, billing customers, delivering goods, and processing cash receipts.

The composition of Oak and Company's accounts receivable are as follows

Over $250,000 - 5 accounts

Between $25,000 and $250,000 - 80 accounts

Less than $25,000 - 200 accounts

The best confirmation strategy for the auditor is:
A) positive confirmations on a sample of all 285 accounts.
B) positive confirmations on all a sample of all accounts over $25,000; negative confirmations on a sample of accounts less than $25,000.
C) positive confirmations on all 5 accounts over $250,000; positive confirmations on a sample of the accounts between $25,000 and $25,000; negative confirmations on a sample of accounts less than $25,000.
D) positive confirmations on all 5 accounts over $250,000; negative confirmations on a sample of the accounts less than $250,000.

Substantive analytical procedures can be used as evidence. Attention-directing analytical procedures use more high-level and aggregated data and are part of the planning phase for risk assessment procedures. Thus, information gained from attention-directing analytical procedures cannot be used as evidence.

Attention-directing analytical procedures use more simple calculations and can reduce substantive testing if the results are in line with what the auditor expects.

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Attention directing analytical procedures occur when significant, unexpected differences are found between current year's unaudited financial data and other data used in comparisons. If an unusual difference is large, the auditor must determine the reason for it, and satisfy himself or herself that the cause is a valid economic event and not an error or misstatement due to fraud.When an analytical procedure reveals no unusual fluctuations, the implication is minimized. In that case, the analytical procedure constitutes substantive evidence in support of the fair statement of the related account balances, and it is possible to perform fewer detailed substantive tests in connection with those accounts.

Frequently, the same analytical procedures can be used for attention directing and for reducing substantive tests, depending on the outcome of the tests. Simple procedures such as comparing the current year account balance to the prior year account balance is more attention directing (and provides less assurance) than more complex analytical procedures; i.e., those which rely on regression analysis.

More sophisticated analytical procedures help the auditor examine relationships between several information variables simultaneously. The nature of these tests may provide greater assurance than simple procedures

What is the primary objective of analytical procedures performed during the planning stages of an audit?

Which of the following is the objective of performing analytical procedures during the planning stage?

What is the primary objective of analytical procedures?

What are the primary analytical procedures that auditors use?