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CMA Intermediate · Corporate Accounting and Auditing · Audit Sampling, Audit Techniques and Analytical Procedure

Which statement about the methods of analytical procedures is consistent with SA 520?

Analytical procedures may use methods ranging from simple comparisons to complex analyses with advanced statistical techniques, and they may be applied to consolidated financial statements, components and individual elements of information. They are therefore not confined to simple comparisons or to one level of data.

  1. AThey are limited to simple year-on-year comparisons of balances
  2. BThey can be applied only to consolidated financial statements
  3. CThey range from simple comparisons to complex analyses using advanced statistical techniques, and can be applied to components and individual elements of informationCorrect
  4. DThey can be applied only to individual transactions and not to financial statements as a whole

Explanation

SA 520 says methods range from simple comparisons to complex analyses using advanced statistical techniques. It adds that they may be applied to consolidated financial statements, components and individual elements of information. The options restricting them to only simple comparisons, only consolidated statements, or only transactions are therefore wrong.

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