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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit procedures and obtaining evidence

Harbour Retail Co is a listed client. During final review of the audit file, the audit senior notes that analytical procedures were performed near the end of the audit. Which statement about this stage is correct under ISA 520 Analytical Procedures?

Analytical procedures near the end of the audit are mandatory under ISA 520. Their purpose is to help the auditor conclude whether the financial statements are consistent with the auditor's understanding of the entity. They are not optional, do not replace misstatement evaluation, and can be delegated.

  1. AAnalytical procedures at the overall review stage are required, and their purpose is to help the auditor form an overall conclusion on whether the financial statements are consistent with the auditor's understanding of the entityCorrect
  2. BAnalytical procedures at the overall review stage are optional, and are performed only where risks of material misstatement were assessed as high
  3. CAnalytical procedures at the overall review stage replace the need to evaluate misstatements identified during the audit
  4. DAnalytical procedures at the overall review stage are performed only by the engagement partner and cannot be delegated

Explanation

ISA 520 requires the auditor to design and perform analytical procedures near the end of the audit that assist in forming an overall conclusion on whether the financial statements are consistent with the auditor's understanding of the entity. They are mandatory, not optional, and do not replace evaluation of misstatements or have to be done by the partner alone.

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