Group 11: Analytical Procedures
30 original test 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.
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AUD-G11-T001 · 2 marksA file has only a list of monthly recorded amounts, with no comparison, expectation or relationship evaluation. Which claim is supported?
Explanation
Correct answer B: Listing amounts alone does not establish an analytical evaluation.
SA 520 paragraph 4 requires plausible-relationship evaluation; a list or technique label alone is insufficient.
The team uses analytics as an assertion-level substantive procedure. What is its objective?
Explanation
Correct answer D: Obtain relevant and reliable audit evidence for the actual objective.
SA 520 paragraph 3(a) defines the objective, with paragraph 5 design and paragraph 7 response requirements.
A final review was done on a materially outdated draft, while the final statements changed. What is best?
Explanation
Correct answer B: Address the actual near-end statement-consistency objective with relevant updated information.
SA 520 paragraph 6 evaluates statements against auditor understanding; an obsolete basis may not address the actual objective.
An assertion has a reliable stable predictive relationship, but contrary audit evidence indicates possible error. What follows?
Explanation
Correct answer A: Evaluate the contrary evidence and perform necessary responsive work.
SA 520 paragraphs 5/7 require meaningful evidence and investigation, not a guarantee from historical predictability.
A benchmark is both external and exactly from the client specialised segment, but its data are outdated after a major pricing change. What remains relevant?
Explanation
Correct answer B: Timeliness and current comparability/relevance must still be evaluated.
SA 520 paragraph 5(b)/A 12 are circumstance-sensitive; matching source type alone does not resolve current relevance.
Internal operational inputs were subject to appropriate audit testing. Which judgment is sound?
Explanation
Correct answer D: That testing may support input reliability, subject to what it actually covered.
SA 520 A 13 allows consideration of audit-tested information; coverage, relevance and model design still matter.
Completeness of a schedule is sound, but its rates were entered incorrectly. What should happen before using it as an expectation?
Explanation
Correct answer D: Address accuracy of rates and reassess the resulting expectation.
SA 520 A 12(d) concerns completeness, accuracy and validity; one sound aspect does not establish all others.
A broad prediction can vary by far more than a potentially material misstatement. The recorded amount lies somewhere within that range. What is right?
Explanation
Correct answer B: Being inside that broad range does not establish sufficient substantive precision.
SA 520 paragraph 5(c)/A 15 require meaningful misstatement-detection precision, including aggregation.
The entity has changed production capacity but the comparison assumes last year capacity unchanged. Which factor needs reconsidering?
Explanation
Correct answer C: Whether the expected relationship continues under known changed conditions.
SA 520 A 6/A 15 connect predictability and known contrary conditions to suitability/precision, without automatic wrongdoing.
Desired assurance and assessed risk are high. A team picks a wide acceptable gap solely from industry habit. What is appropriate?
Explanation
Correct answer A: Determine a supported gap considering materiality, aggregation, risk and desired persuasive evidence.
SA 520 A 16 links the criterion to these engagement considerations; no universal percentage applies.
Evidence relevant to management explanation contradicts it. What response is sound?
Explanation
Correct answer D: Evaluate the contradiction and perform other procedures as necessary rather than inquiry-only closure.
SA 520 paragraph 7/A 20-A 21 require evidence-backed investigation and appropriate follow-up, not automatic report selection.
Management explanation is supported adequately by relevant evidence and no other inconsistent fact remains. Which claim is best?
Explanation
Correct answer C: Evaluate and use the supported result; extra procedures depend on necessity in the circumstances.
SA 520 paragraph 7(b)/A 21 make further procedures responsive to necessity; adequate relevant support is distinct from a bare narrative.
Overall analytics are similar in technique to planning analytics. Does that make their audit purpose identical?
Explanation
Correct answer B: No; similar methods can serve different timing and objectives.
SA 520 A 19 notes possible method similarity while paragraphs 1/3/6 distinguish purposes.
After a new near-end risk appears, the auditor revises risk assessment but performs no needed changes to further work. What is missing?
Explanation
Correct answer C: Modify further planned procedures accordingly where required.
SA 520 A 18 points to both reassessment and procedure modification; no universal numerical response is specified.
A model checks aggregate recorded expense, but the relevant risk involves misclassification between two accounts with the same total. What is best?
Explanation
Correct answer C: Assess whether the model can address that classification assertion and use suitable additional evidence if not.
SA 520 paragraph 5(a) requires assertion-specific suitability; one total may not identify offsetting classification errors.
A receivable model combines ageing data with subsequent cash-receipt detail. A receipt contradicts the model for a major balance. What is best?
Explanation
Correct answer D: Investigate the inconsistency and evaluate appropriate collectability evidence.
SA 520 A 10 permits combination; paragraph 7 requires responsive investigation of relevant inconsistency, not a fixed allowance.
An economy-wide statistic is available but no supported relationship to a government service exists. What is sound?
Explanation
Correct answer A: Do not force an irrelevant commercial relationship; seek relevant evidence/procedures.
SA 520 A 11 recognises different non-business relationships, while paragraph 5 requires actual suitability/relevance.
One model strongly supports a recurring income assertion. A second gross-margin comparison provides only corroboration in its circumstances. What does this show?
Explanation
Correct answer B: Different analytical procedures may provide different persuasive strengths.
SA 520 A 8 contrasts persuasive verified models with less persuasive useful corroboration; context matters.
Financial inputs are reliable but relevant non-financial inputs are known incomplete. The model matches actuals. Which answer is best?
Explanation
Correct answer C: Address incomplete inputs; agreement does not cure their reliability defect.
SA 520 paragraph 5(b)/A 12-A 15 require relevant reliable data, not outcome-based validation.
A difference is below a supported acceptable amount, but its relationship contradicts other relevant evidence. What is appropriate?
Explanation
Correct answer A: Investigate the inconsistency under paragraph 7 rather than use the amount as a blanket exemption.
SA 520 paragraph 7 also addresses relationships inconsistent with other relevant information; acceptable amount is not a universal exemption.
A comparison uses gross sales for one year and net sales after returns for the other. What is needed?
Explanation
Correct answer C: A supported comparable definition before interpreting the movement.
SA 520 A 12 comparability/nature/relevance require like measures; raw movement is not a final cause finding.
A team inspects a rent contract and recalculates invoiced amounts. No plausible-relationship evaluation is performed. Which is correct?
Explanation
Correct answer A: Those procedures are not automatically analytics merely because relevant to rent.
SA 520 paragraph 4 defines analytics; relevant inspection/recalculation retain their separate nature unless analytical evaluation is actually done.
Exercise:25 supported machine-months at fixed Rs 12,000 each, no extras. Recorded hire cost Rs 3.4 lakh; supplied investigation limit Rs 0.25 lakh. Which is right?
Explanation
Correct answer C: Expectation Rs 3 lakh; gap Rs 0.4 lakh exceeds the supplied limit.
25 x 12000=300000;340000-300000=40000>25000. SA 520 paragraph 5/7 apply under supplied assumptions, not a statutory threshold.
Exercise: two service lines have sales Rs 30 lakh at 20% expected margin and Rs 70 lakh at 30%. What is the weighted expected margin?
Explanation
Correct answer D: 27%, from gross profit Rs 27 lakh on sales Rs 100 lakh.
30 x.20+70 x.30=6+21=27;27/100=27%. SA 520 paragraph 5(c)/A 15 require a suitable supported expectation, not unweighted fitting.
Exercise:expected Rs 12 lakh and actual Rs 11.7 lakh. Supplied criterion requires investigation for absolute differences at least Rs 0.3 lakh. What follows?
Explanation
Correct answer A: The Rs 0.3 lakh difference meets the supplied inclusive trigger.
1200000-1170000=30000, equal to supplied trigger. The wording is exercise-specific; SA 520 paragraph 7 still requires evidence-backed investigation, not fraud inference.
Exercise: reliable units 10,000; expected net revenue Rs 80 per unit after a supported discount, with no other elements. Ledger Rs 8.2 lakh. What is correct?
Explanation
Correct answer C: Expected Rs 8 lakh; residual Rs 0.2 lakh, without subtracting the discount again.
10000 x 80=800000;820000-800000=20000. SA 520 paragraph 5/7 require suitable assumptions and response; already-modelled elements are not double deductions.
A team nets a positive difference in one assertion against a negative difference in another and declares no audit issue solely because net zero. What is sound?
Explanation
Correct answer D: Evaluate underlying causes, assertion effects and misstatement context rather than assume automatic cancellation.
SA 520 paragraph 5(c)/(d),A 15-A 16 address identification/aggregation and evidence needs; cancellation alone is not an assertion guarantee.
An interim model uses data tested for the first half only. Can the same reliability conclusion automatically cover the second-half data?
Explanation
Correct answer B: No; reliability and remaining-period evidence need their actual coverage considered.
SA 520 A 14 covers interim and remaining-period reliability considerations with relevant SA 330 follow-up requirements.
A management-prepared schedule was found accurate for amounts but irrelevant to the chosen assertion. What is best?
Explanation
Correct answer D: Select evidence suitable and relevant to that assertion; accuracy alone does not cure relevance.
SA 520 paragraph 5(a)/(b) combines assertion suitability with information reliability/relevance, not a single accuracy gate.
The review conclusion says "all amounts guaranteed correct" solely because near-end analytics agreed. What correction is appropriate?
Explanation
Correct answer A: Analytics assist/corroborate the overall consistency conclusion, not an all-amount guarantee.
SA 520 paragraph 6/A 17 define this purpose; corroboration and reasonable conclusion are not exhaustive certainty.
Official standard: SA520.