Chapter 3 Part 3

Question 1

what are the five types of general analytical procedures?

Answer 1

1. comparison of current-year account balances to balances of one or more comparable periods
2. comparison of current-year account balances to anticipated results found in the company’s budgets an forecasts
3. evaluation of the relationships of current-year account balances to other current-year balances for conformity with predictable patterns based on the company’s experience
4. comparison of current-year account balances and financial relationships (e.g. ratios) with similar information for the industry in which the company operates
5. Study of the relationships of current-year account balances with relevant nonfinancial information (e.g., physical production statistics)

Question 2

1. comparison of current-year account balances to balances of one or more comparable periods

Answer 2

The first type of general analytical procedures

Question 3

2. comparison of current-year account balances to anticipated results found in the company’s budgets an forecasts

Answer 3

The second type of general analytical procedures

Question 4

3. evaluation of the relationships of current-year account balances to other current-year balances for conformity with predictable patterns based on the company’s experience

Answer 4

The third type of general analytical procedures

Question 5

4. comparison of current-year account balances and financial relationships (e.g. ratios) with similar information for the industry in which the company operates

Answer 5

The fourth type of general analytical procedures

Question 6

5. Study of the relationships of current-year account balances with relevant nonfinancial information (e.g., physical production statistics)

Answer 6

The fifth type of general analytical procedures

Question 7

When are analytical procedures required during an audit engagement?

Answer 7

When planning the audit and when performing final review. Also to test assertions.

Question 8

Establish overall strategy and make a comprehensive list of the specific audit procedures the audit team needs to perform to gather sufficient appropriate evidence on which to base their opinion on the financial statements.

Answer 8

What is the purpose of a planning memorandum?

Question 9

nature, timing, and extent of procedures to be performed to assess risk of material misstatement at the financial statement and assertion level. Then nature, timing, extent of control and substantive tests designed to mitigate risks to acceptable level

Answer 9

List items normally documented in a planning memo.

Question 10

1. Charter, bylaws
2. Leases, bonds
3. History of company
4. Meeting minutes
5. C/forward accounts (R/E)
6. Prior years’ financial statements
7. Client org chart

Answer 10

What info would you expect to find in a permanent audit file?