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

Which statement about the nature of analytical procedures is consistent with SA 520 Analytical Procedures?

Analytical procedures range from simple comparisons to complex analyses using advanced statistical techniques. SA 520 also says they may be applied to consolidated financial statements, components and individual elements of information, so they are not restricted to simple comparisons.

  1. AThey are limited to simple year-on-year comparisons
  2. BThey can be applied only to individual transactions
  3. CThey range from simple comparisons to complex analyses using advanced statistical techniquesCorrect
  4. DThey can be applied only to unconsolidated statements

Explanation

SA 520 states that methods range from simple comparisons to complex analyses using advanced statistical techniques, and may be applied to consolidated financial statements, components and individual elements of information. Hence limiting them to simple comparisons, single transactions or unconsolidated statements is wrong.

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