AC4:Q60 Explanation
Direct SA 520 definition: evaluates data relationships to detect anomalies or support conclusions.
Direct SA 520 definition: evaluates data relationships to detect anomalies or support conclusions.
AC4:Q62 Explanation
Gross margin percentages follow expected patterns and are suited to analytical procedures involving relationships.
Comparable information for prior periods, anticipated results of the entity, and similar industry information are examples of analytical procedures having consideration of comparisons of the entity's financial information.
Gross margin percentages follow expected patterns and are suited to analytical procedures involving relationships.
Comparable information for prior periods, anticipated results of the entity, and similar industry information are examples of analytical procedures having consideration of comparisons of the entity's financial information.
AC4:Q63 Explanation
Statement I is incorrect. As per SA 520 Analytical Procedures, the term "analytical procedures" means evaluation of financial information through analysis of plausible relationships among both financial and non-financial data.
Statement I is incorrect. As per SA 520 Analytical Procedures, the term "analytical procedures" means evaluation of financial information through analysis of plausible relationships among both financial and non-financial data.
AC4:Q64 Explanation
Trend analysis implies analysing account fluctuations by comparing current year to prior year information and, also, the information derived over several years. For example, the auditor may compare the salary paid by the company for the current year and match it with the salary paid by the company for several earlier years. An unusual increase in such expense may indicate that fraudulent payments are being made to fake employees.
Trend analysis implies analysing account fluctuations by comparing current year to prior year information and, also, the information derived over several years. For example, the auditor may compare the salary paid by the company for the current year and match it with the salary paid by the company for several earlier years. An unusual increase in such expense may indicate that fraudulent payments are being made to fake employees.
AC4:Q65 Explanation
Analytical Procedures may be segregated into the following major types: 1. Comparison of client and industry data, 2. Comparison of client data with similar prior periods, 3. Comparison of client data with auditor-determined expected results, 4. Comparison of client data with expected results, using non-financial data.
Analytical Procedures may be segregated into the following major types: 1. Comparison of client and industry data, 2. Comparison of client data with similar prior periods, 3. Comparison of client data with auditor-determined expected results, 4. Comparison of client data with expected results, using non-financial data.
AC4:Q66 Explanation
Reasonableness tests involve reviewing the relationship of account balances to non-financial data or examining the reasonableness of account balances with regard to expected outcomes. For example, auditors may compare the interest expense as reported to the amount of interest-bearing debt to assess if the interest expense is appropriate relative to the amount of interest-bearing debt outstanding.
Reasonableness tests involve reviewing the relationship of account balances to non-financial data or examining the reasonableness of account balances with regard to expected outcomes. For example, auditors may compare the interest expense as reported to the amount of interest-bearing debt to assess if the interest expense is appropriate relative to the amount of interest-bearing debt outstanding.