[Anonymous]

Hi guys, Im reviewing Becker’s A3 lecture and theres a question that I dont even understand why the answer is correct even with Becker’s answers and explanation.

The question is : When performing analytical procedures in the planning stage, the auditor most likely would develop expectations by reviewing which of the following sources of information?

A. Unaudited information from internal quarterly reports

B. Various account assertions in the planning memorandum

C. Comments in the prior year’s management letter

D. The control risk assessment relating to specific financial assertions.

I chose D, the correct answer is A.

Their explanation of why A is correct was : Analytical procedures involve comparison of recorded amounts to independent expectations developed by the auditor. During the planning stage, analytical procedures generally use financial data, such as unaudited information from internal quarterly reports.

After rereading the question now I feel like I understand it maybe, is it because control risk assessment is done by management as well, (not the auditor)?

Thanks in advance guys!

Auditing is VERY trick, I find myself getting questions wrong for missing ONE word in a question or a choice. UGH

[Anonymous]

??anyone?

[littlenumberrobot]

Not sure this will help, but from my understanding analytical procedures are anything to do with comparisons. So with the question I would look for something that could be compared or some data that could have ratios applied to get more information. The unaudited information, especially since quarterly reports, could be used to see what changes quarter to quarter and see if there is something worth looking in a little deeper.

Auditing is very tricky, I agree.

CA CPA - All because of the journey listed below
-----------------------------------------------------------------------
FAR - 53('10), 8/25/12 79 PASSED!
REG - 66('11), 69('12), 12/06/12 77 PASSED!!
BEC - 58('10), 74('12), 01/05/13 77 PASSED!!!
AUD - 43('11), 66('12), 69('13), 74('13) 7/29/13 85 PASSED!!!!!

(Combinations of Roger, Yaeger, Wiley Book, Wiley TB, & NINJA Notes)

Ethics 90%

[lateralus ag]

I don't exactly understand what part of that confused you but my hunch is that you are confused about what D is actually saying. You wouldn't develop expectations based on the control risk assessment. That would be for determining how much audit work you would have to do. AR=IRxCR+DR (I think !!). Control risk pertains to Detection Risk and your allowable levels there. Analytical procedures is what is stated in the problem. You don't perform analytical procedures with regard to control risk assessments.

When I read the question, I covered the answers and thought – Analytical procedures is comparing balances and numbers to expected amounts or using ratio analysis to determine if the relationships between balances is reasonable. So, the answer will have to have something to do with that. All the other answers pertain to assertions, comments, or assessments. None of those pertain to analytical procedures.

That's the rub with AUD. You can't reason your way into an answer until you have a firm grasp of the concepts. It's not like FAR where you can “figure” your way into a right answer. In this case, if you know what analytical procedures are and what you have to have to perform them (numbers and balances) then the answer is obvious.

Hope that helps.

FAR 88
REG 89
AUD 89
BEC 86
DONE!!!
Using Becker Review and Becker Final Review, and Ninja Audio for BEC

[Author]

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