[Anonymous]

Which of the following activities is a near completion of an audit to ensure that the financial statements are free from material misstatement?

Reading the minutes of the board of directors’ meetings for the year under audit.

Obtaining a letter concerning potential liabilities from the client’s attorney.

Comparing the current year’s financial statements with those of the prior year.

Ensuring that a representation letter signed by management is in the file.

C. This answer is correct because these procedures are used by an auditor when forming an overall conclusions about whether the financial statements are consistent with the auditor’s understanding of the entity and comparing current year financial statements with those of the prior year will help the auditor to determine whether the amounts seem reasonable.

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How is comparing current year and prior year financial statements done near the end of the audit? Isn’t this an analytical procedure, and don’t you do these at the beginning of the audit?

[mla1169]

Yup and then you do it again at the end of an audit after any adjusting entries are made.

FAR- 77
AUD -49, 71, 84
REG -56,75!
BEC -75

Massachusetts CPA (non reporting) since 3/12.

[tami3492]

This is one thing that Becker stresses over and over again. Analytical procedures are mandatory during planning to understand the entity and identify areas of risk and as an overall review in the final review stage of the audit.

FAR 7/8/14 - 88 - Becker live course
REG 10/14/14 - 82 - Becker live course, Ninja notes and audio
BEC 11/25/14 - 88 - Becker live course, Ninja audio, Wiley book for extra questions
AUD 2/3/15 - 94 - Becker self study, Ninja audio, Wiley book for extra questions

[Author]

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