A declining industry with increasing business failures is an industry condition that is indicative of increased...
A declining industry with increasing business failures is an industry condition that is indicative of increased risk of fraudulent financial reporting. TRUE/FALSE
Analytical procedures are optional procedures that may be useful to the auditors during the risk assessment stage of the audit.TRUE/FALSE
Homework Answers
1. Answer is -------> True
Explanation :
When there is risk of business failure , there are higher chances of commiting financial frauds and window dressed the financial statements to the investor and regulatory authority so as to bring more investment in the company and avoid any legal regulation.
Hence auditor while conducting the audit shall take due care of these perspectives and conduct the audit accordingly.
2. Answer is --------> False
Explanation :
It is wrong to say that analytical procedures are optional procedures for assessing the risk assessment but instead they are mandatory to be conducted by the auditor for determining the nature time and extent of the audit.
They are required at each and every level of audit so as to determine the materiality of the audit and to determine the extent of audit required .
Hence analytical procedures are mandatory for auditor to perform during the risk assessment stage.
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