Question

Which of the following is not a typical analytical procedure_________.

• A. Study of relationships of the financial information with relevant nonfinancial information
• B. Comparison of the financial information with similar information regarding the industry in which the entity operates
• C. Comparison of recorded amounts of major disbursements with appropriate invoices
• D. Comparison of the financial information with budgeted amounts

Answer 1

The correct option is C Comparison of recorded amounts of major disbursements with appropriate invoices

Analytical procedures are one of many financial audit processes which help an auditor understands the client's business and changes in the business and to identify potential risk areas to plan other audit procedures. It includes comparison of financial information with
1. Prior periods 2. Budgets 3. Forecasts 4. Similar industries and so on.
It also includes consideration of predictable relationships, such as:
1. Gross profit to sales
2. Payroll costs to employees
3. Financial information and non financial information.
It does not include comparison of recorded amounts with appropriate invoices.