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

Which statement about the methods used to perform analytical procedures is consistent with SA 520 Analytical Procedures?

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

  1. AThey are limited to simple year-on-year comparisons of account balances
  2. BThey may range from simple comparisons to complex analyses using advanced statistical techniquesCorrect
  3. CThey may be applied only to individual elements of information, never to consolidated statements
  4. DThey are applicable only to the financial statements of listed companies

Explanation

SA 520 states that various methods may be used, ranging from simple comparisons to complex analyses using advanced statistical techniques. It also states they may be applied to consolidated financial statements, components and individual elements of information. The options that limit the methods or the level of application contradict this.

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