Answered: During the planning phase of an audit…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

During the planning phase of an audit client, Ana Alitick (auditor) utilises analytical procedures. These procedures range from simple comparisons to the use of complex models involving many relationships and elements of data. The procedures also include comparisons of recorded amounts, or ratios developed from recorded amounts, to expectations developed by the auditors.
Required:

4) Name the four categories of financial ratios and give an example of a ratio in each
category. What is the primary information provided by each financial ratio category?
5) Describe the factors that influence an auditor’s consideration of the reliability of data for purposes of achieving audit objectives?

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