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

Which statement about using CAATs to perform analytical procedures is consistent with SA 520?

SA 520 says analytical procedures range from simple comparisons to complex analyses using advanced statistical techniques, and may be applied to consolidated statements, components and individual elements of information. Hence CAAT-driven statistical analysis of detailed data is consistent with the standard.

  1. AAnalytical procedures are limited to simple comparisons and cannot involve statistical techniques
  2. BAnalytical procedures can be applied only to the consolidated financial statements as a whole
  3. CAnalytical procedures may range from simple comparisons to complex analyses using advanced statistical techniques, and may be applied to individual elements of informationCorrect
  4. DAnalytical procedures can be performed only manually, never through software

Explanation

SA 520 states that methods range from simple comparisons to complex analyses using advanced statistical techniques, and that procedures may be applied to consolidated statements, components and individual elements of information. This supports using software-based analysis. The other options impose limits that the standard does not contain.

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