ACCA Audit and Assurance (F8) Practice Exam

What kind of analytical procedures might be relevant for auditing expenses and payables?

1. Examining stock levels only

2. Evaluating month-to-month changes

3. Calculating cash flows

4. Reviewing employee turnover

The correct answer is: Evaluating month-to-month changes

Evaluating month-to-month changes is a relevant analytical procedure for auditing expenses and payables because it allows auditors to identify unusual fluctuations and trends over time. By comparing expenses and payables from one month to the next, auditors can spot any discrepancies or anomalies that may indicate potential issues such as errors in recording transactions, misclassification of expenses, or even fraud. This analysis helps to ensure that reported amounts are consistent and reasonable, enhancing the reliability of financial statements. Other options, while potentially useful in different contexts, do not specifically target the auditing of expenses and payables as directly. For example, examining stock levels may provide insights into inventory management but does not directly correlate with payables. Calculating cash flows focuses on liquidity and cash management rather than specifically analyzing expenses and payables. Reviewing employee turnover could provide insights into workforce stability but is not pertinent to assessing financial transaction accuracy in the context of expenses and payables.