Group 11: Analytical Procedures

30 original practice MCQs. 2 marks each. Separate practice and test sets.

Original practice, not ICAI questions, official suggested answers or an official examiner scheme. Equivalent correct work is credited within the stated caps. Public practice availability is not full official question-bank completion.

Supplied numerical assumptions and limits are exercise facts, not statutory thresholds. Source boundary: direct confirmations are not automatically analytics despite broad module grouping.

Not scored yet.

AUD-G11-P001 · 2 marks

A team analyses supported deliveries and average invoice value to assess recorded revenue. Which feature makes this analytical rather than merely adding invoices?

A. Evaluation of a plausible financial/non-financial relationship. B. Any use of a spreadsheet automatically makes it analytical. C. Only the number of invoices matters, not the relationship. D. Every recalculation is necessarily the same procedure.

Explanation

Correct answer A: Evaluation of a plausible financial/non-financial relationship.

SA 520 paragraph 4 defines relationship-based evaluation; software or arithmetic alone is not the distinguishing feature.

AUD-G11-P002 · 2 marks

At planning, unusual spending trends help the auditor identify risks. Which standard boundary is correct?

A. SA 520 makes all risk-assessment procedures optional. B. Risk-assessment analytics are prohibited. C. Risk-assessment analytics are dealt with in SA 315; SA 520 covers substantive and near-end uses. D. SA 520 alone governs every risk-assessment requirement.

Explanation

Correct answer C: Risk-assessment analytics are dealt with in SA 315; SA 520 covers substantive and near-end uses.

SA 520 paragraph 1 states the respective scope without eliminating the planning role.

AUD-G11-P003 · 2 marks

A team never performs near-end analytics because substantive analytics were performed earlier. What is best?

A. Earlier substantive work always cancels paragraph 6. B. Perform near-end analytics to assist the overall consistency conclusion. C. Near-end analytics are optional whenever fees are paid. D. Only an unsupported management letter can replace all review.

Explanation

Correct answer B: Perform near-end analytics to assist the overall consistency conclusion.

SA 520 paragraph 6 requires near-end design/performance for the stated overall objective; early evidence has a different purpose.

AUD-G11-P004 · 2 marks

A predictable fixed-charge stream and a volatile discretionary expense have equal balances. Which judgment is sound?

A. Predictability never affects analytical evidence. B. Both automatically require identical models because amounts match. C. The volatile item can never be audited. D. Evaluate each procedure suitability and predictive precision, not balance size alone.

Explanation

Correct answer D: Evaluate each procedure suitability and predictive precision, not balance size alone.

SA 520 paragraph 5(a)/(c),A 6/A 15 connect suitability and precision to the actual relationship and assertion.

AUD-G11-P005 · 2 marks

Weak transaction-processing controls affect a receivable assertion. The model only uses broad sales growth. What is appropriate?

A. Consider whether more reliance on detail tests is needed for the assertion and assessed risk. B. Broad growth automatically cures weak controls. C. No substantive response is needed if total sales increased. D. Every weak control proves every receivable fictitious.

Explanation

Correct answer A: Consider whether more reliance on detail tests is needed for the assertion and assessed risk.

SA 520 A 9 illustrates risk/control conditions affecting suitability; it does not create an automatic fraud conclusion.

AUD-G11-P006 · 2 marks

A supplier of external benchmark data uses a different market segment from the client. What needs attention?

A. A benchmark gap automatically sets an adjustment. B. External status guarantees suitability in all circumstances. C. Comparability and relevance despite external-source status. D. All external data must be rejected.

Explanation

Correct answer C: Comparability and relevance despite external-source status.

SA 520 paragraph 5(b)/A 12 require source plus comparability/nature/relevance and controls considerations.

AUD-G11-P007 · 2 marks

Management prepared analytical data under supported effective preparation controls. May it be considered?

A. Yes, if the auditor is satisfied it is properly prepared and suitable. B. No management-prepared data can ever be used. C. Only a public forecast can be used in every case. D. Yes, preparation by management automatically proves it reliable.

Explanation

Correct answer A: Yes, if the auditor is satisfied it is properly prepared and suitable.

SA 520 A 5/A 12-A 13 permit effective use with supported reliability, not categorical acceptance or rejection.

AUD-G11-P008 · 2 marks

A budget is expressly a stretch goal rather than expected operating results. Which distinction matters?

A. A budget label guarantees a precise prediction. B. A stretch target is automatically fraud evidence. C. Its nature/relevance as a goal versus an expected-result basis. D. Every budget is prohibited as an analytical input.

Explanation

Correct answer C: Its nature/relevance as a goal versus an expected-result basis.

SA 520 A 12(c) specifies this reliability distinction; suitability depends on circumstances.

AUD-G11-P009 · 2 marks

A visitor-count schedule used to predict ticket income omits closed days and was not checked. What is best?

A. Recorded cash totals validate every visitor count automatically. B. A count field is reliable solely because numeric. C. Any schedule match proves all admissions correctly recorded. D. Evaluate completeness/accuracy of the relevant non-financial inputs before relying on results.

Explanation

Correct answer D: Evaluate completeness/accuracy of the relevant non-financial inputs before relying on results.

SA 520 paragraph 5(b)/A 12-A 13 require reliable inputs, including non-financial information, not numeric appearance alone.

AUD-G11-P010 · 2 marks

A complex statistical model cannot detect a potentially material error because prediction intervals are too wide. What is the problem?

A. More decimal places alone solve predictive uncertainty. B. Complexity always guarantees adequate precision. C. Wide intervals make audit risk zero. D. Expectation precision is inadequate for the substantive objective.

Explanation

Correct answer D: Expectation precision is inadequate for the substantive objective.

SA 520 paragraph 5(c)/A 15 focus on detection capability, not technical sophistication or decimal precision.

AUD-G11-P011 · 2 marks

Available division data show differing patterns but an aggregate ratio hides them. What may improve substantive precision?

A. Suitable disaggregation using reliable division information. B. Always discard division data and use only the total. C. Treat net stability as a complete evidence guarantee. D. Assume all division patterns must be identical.

Explanation

Correct answer A: Suitable disaggregation using reliable division information.

SA 520 A 15 identifies disaggregation as relevant; reliability and appropriate relationships still need evaluation.

AUD-G11-P012 · 2 marks

Quantity information is unavailable and a guessed value is selected to match the ledger. What is right?

A. No other audit procedures may be considered. B. The fitted guess does not create reliable independent expectation support. C. A perfect match proves the guessed quantity correct. D. Guessing is required whenever data is missing.

Explanation

Correct answer B: The fitted guess does not create reliable independent expectation support.

SA 520 paragraph 5(b)-(c)/A 15 require available reliable inputs and precision; circular fitting is not corroboration.

AUD-G11-P013 · 2 marks

Assessed risk rises without better model evidence. What normally happens to acceptable unexplained difference for desired persuasive evidence?

A. It decreases rather than widens solely for convenience. B. Risk never affects acceptable difference. C. It must increase to avoid extra work. D. A universal ten-percent limit applies to every audit.

Explanation

Correct answer A: It decreases rather than widens solely for convenience.

SA 520 A 16 states the risk/evidence relationship; no universal percentage is supplied.

AUD-G11-P014 · 2 marks

An analytical difference is small alone but could combine with other misstatements. What is best?

A. Treat every small difference as proved fraud. B. Only cash errors can aggregate. C. Consider aggregation and materiality when evaluating acceptable difference and evidence needs. D. Always ignore every individually small difference.

Explanation

Correct answer C: Consider aggregation and materiality when evaluating acceptable difference and evidence needs.

SA 520 paragraph 5(c)-(d)/A 16 explicitly include individually or aggregated material-misstatement risk.

AUD-G11-P015 · 2 marks

Recorded cost exceeds a supported expectation significantly. Management gives an explanation. What must investigation include?

A. A significant gap automatically requires adverse opinion. B. All management explanations must be rejected without evaluation. C. The explanation alone always finishes the procedure. D. Appropriate audit evidence relevant to the response and other procedures as necessary.

Explanation

Correct answer D: Appropriate audit evidence relevant to the response and other procedures as necessary.

SA 520 paragraph 7/A 20-A 21 require inquiry with evidence and necessary other procedures, not automatic report selection.

AUD-G11-P016 · 2 marks

Management cannot explain a significant relationship inconsistency. What response is appropriate?

A. Invent a plausible explanation for the file. B. Perform other audit procedures as necessary to investigate. C. Declare every possible cause fraud. D. Close it by writing unexplained.

Explanation

Correct answer B: Perform other audit procedures as necessary to investigate.

SA 520 A 21 directly addresses inadequate or unavailable explanations; actual evidence drives the response.

AUD-G11-P017 · 2 marks

Near-end analytics reveal a previously unrecognised risk. What follows?

A. Always reuse the original plan without changes. B. Revise risk assessment and modify further planned procedures as required. C. Ignore it because the audit is nearly finished. D. Every new risk automatically determines a disclaimer.

Explanation

Correct answer B: Revise risk assessment and modify further planned procedures as required.

SA 520 A 18 refers to the required risk reassessment/response; the review may identify rather than only confirm.

AUD-G11-P018 · 2 marks

A predictive model has appropriately verified elements and provides persuasive evidence for a relevant assertion. Which claim is correct?

A. Model arithmetic alone proves all inputs verified. B. Every model eliminates every detail test and assertion procedure. C. It may reduce or eliminate further detail verification in suitable circumstances, not universally. D. Analytics can never provide substantive evidence.

Explanation

Correct answer C: It may reduce or eliminate further detail verification in suitable circumstances, not universally.

SA 520 A 8 states a conditional possibility; assertion/risk/reliability/precision still govern.

AUD-G11-P019 · 2 marks

A public service has little relationship between revenue and expenditure. Which model choice is best?

A. Always impose a retailer gross-margin ratio. B. Any high output cost proves corruption. C. No analytics can ever apply in the public sector. D. Seek a relevant supported relationship, such as suitable output/cost information.

Explanation

Correct answer D: Seek a relevant supported relationship, such as suitable output/cost information.

SA 520 A 11 discusses non-business contexts and alternative relationships without automatic wrongdoing conclusions.

AUD-G11-P020 · 2 marks

Receivable ageing analytics and subsequent receipt detail tests both address collectability. Are they mutually exclusive?

A. No, but no reliability assessment is required. B. No; they may appropriately be combined on the same assertion. C. Yes, analytics automatically invalidate receipts evidence. D. Yes, only one type is ever allowed.

Explanation

Correct answer B: No; they may appropriately be combined on the same assertion.

SA 520 A 10 illustrates this combination while design/evidence requirements remain.

AUD-G11-P021 · 2 marks

A debtor confirmation is received directly. The team calls receipt alone analytics. What is the correction?

A. All evidence from outside is necessarily analytics. B. Every confirmation must be excluded from audit evidence. C. Any relevant procedure meets the SA 520 definition automatically. D. Receipt alone is a distinct confirmation procedure, not automatically plausible-relationship analysis.

Explanation

Correct answer D: Receipt alone is a distinct confirmation procedure, not automatically plausible-relationship analysis.

SA 520 paragraph 4 defines analytics; the module broad grouping is held rather than copied as a universal classification.

AUD-G11-P022 · 2 marks

Client and industry margin data use different cost definitions. What should happen before relying on the gap?

A. Ignore definitions because percentages always compare. B. Establish a supportably comparable basis or choose a suitable different expectation. C. Treat every definition gap as a sales error. D. Force agreement with an invented number.

Explanation

Correct answer B: Establish a supportably comparable basis or choose a suitable different expectation.

SA 520 A 12 comparability/nature/relevance apply to measurement definitions as well as business similarity.

AUD-G11-P023 · 2 marks

A model reliably predicts rental income. Which assertion is NOT automatically proved by its success?

A. The model usefulness for the income assertion under its actual conditions. B. Legal ownership of the rented property. C. That the computation can be compared with recorded income. D. That verified rent and occupancy can form relevant inputs.

Explanation

Correct answer B: Legal ownership of the rented property.

SA 520 paragraph 5(a)/A 9 require assertion suitability; relevance does not spread automatically to rights.

AUD-G11-P024 · 2 marks

The acceptable difference is raised after results solely so a significant gap passes. What is the issue?

A. Raising a limit is always required after any gap. B. Every threshold revision is prohibited even if new facts arise. C. A pass obtained by changing the limit proves no error. D. The criterion is result-fitted rather than supported by materiality, risk and desired assurance.

Explanation

Correct answer D: The criterion is result-fitted rather than supported by materiality, risk and desired assurance.

SA 520 paragraph 5(d)/A 16 require a supported criterion; real changed facts differ from convenient hindsight fitting.

AUD-G11-P025 · 2 marks

Exercise data: reliable serviced jobs 2,000 at a fixed Rs 500 each, no other income. Recorded income Rs 10.6 lakh; supplied investigation limit Rs 0.4 lakh. Which is correct?

A. Expected Rs 10 lakh; gap Rs 0.6 lakh exceeds the supplied limit. B. Expected Rs 1 lakh; gap Rs 9.6 lakh. C. Gap Rs 0.6 lakh proves fraud automatically. D. Expected Rs 10.6 lakh because recorded amount defines expectation.

Explanation

Correct answer A: Expected Rs 10 lakh; gap Rs 0.6 lakh exceeds the supplied limit.

2,000 x 500=10,00,000;10,60,000-10,00,000=60,000. SA 520 paragraph 5/7 guide evidence-backed investigation; the limit is supplied exercise fact.

AUD-G11-P026 · 2 marks

Exercise: sales Rs 80 lakh at supported expected margin 15% and sales Rs 20 lakh at 40%. What is weighted expected gross profit?

A. Rs 20 lakh, a 20% overall margin. B. Rs 12 lakh ignoring the second product. C. Rs 55 lakh because percentages are simply added. D. Rs 27.5 lakh from unweighted 27.5%.

Explanation

Correct answer A: Rs 20 lakh, a 20% overall margin.

80 x.15+20 x.40=12+8=20 lakh,20/100=20%. SA 520 paragraph 5(c)/A 15 support a relevant precise expectation under supplied assumptions.

AUD-G11-P027 · 2 marks

Exercise: expectation Rs 48 lakh, actual Rs 49 lakh, supplied acceptable difference Rs 1.2 lakh and no other inconsistency. What is justified?

A. A universal legal Rs 1.2 lakh safe harbour applies. B. No other evidence can ever be considered again. C. The Rs 1 lakh gap is within the supplied criterion, not a guarantee all assertions are correct. D. The gap automatically proves fraud.

Explanation

Correct answer C: The Rs 1 lakh gap is within the supplied criterion, not a guarantee all assertions are correct.

49-48=1 lakh<1.2. SA 520 paragraph 5(d)/7 distinguish acceptable difference from blanket evidence guarantees; threshold is exercise-specific.

AUD-G11-P028 · 2 marks

A nine-month substantive model uses rates that changed in month ten. What is appropriate for remaining-period work?

A. Pretend the tested period covered all twelve months. B. Only the old inputs can be used. C. Use reliable relevant remaining-period information and a supported current expectation or other suitable procedures. D. Automatically extend the old ratio unchanged.

Explanation

Correct answer C: Use reliable relevant remaining-period information and a supported current expectation or other suitable procedures.

SA 520 A 14 and relevant SA 330 follow-up requirements address interim coverage; changed relationships matter underA 6.

AUD-G11-P029 · 2 marks

An overall review shows numeric ratios stable but a disclosure inconsistent with the auditor understanding. Which claim is sound?

A. Stable ratios do not automatically establish statement/disclosure consistency. B. Overall review proves every assertion exhaustively. C. No disclosure can matter once ratios agree. D. Every disclosure inconsistency requires the same opinion automatically.

Explanation

Correct answer A: Stable ratios do not automatically establish statement/disclosure consistency.

SA 520 paragraph 6/A 17-A 18 assist overall consistency conclusion, not a universal numeric-only sign-off or report rule.

AUD-G11-P030 · 2 marks

The auditor chooses between simple comparisons and advanced analytics. What owns the choice?

A. Always the fewest calculations regardless of risk. B. Professional judgment about purpose, assertion/risk, evidence and suitable precision. C. A tool brand guarantees sufficient evidence. D. Always the most complex technique.

Explanation

Correct answer B: Professional judgment about purpose, assertion/risk, evidence and suitable precision.

SA 520 paragraph 4/A 3-A 4 allow different methods/levels; technique labels do not replace the evidence judgment.

Official standard: SA520.