ACCA Audit and Assurance (F8) Practice Exam

Which is NOT a type of analytical procedure?

1. Compare information of different periods

2. Compare actual results to industry benchmarks

3. Assess the effectiveness of internal control

4. Compare anticipated revenue to actual revenue

The correct answer is: Assess the effectiveness of internal control

Analytical procedures are techniques used in auditing that involve evaluating financial information by studying plausible relationships among both financial and non-financial data. They often help auditors identify any inconsistencies or unusual patterns that could indicate potential misstatements in the financial statements. The option that states the assessment of the effectiveness of internal control is indeed not considered an analytical procedure. This is because evaluating internal controls is more about understanding and testing the systems and processes in place within an organization rather than analyzing financial data relationships. Such assessments typically occur during a risk assessment phase and are focused on the design and operational effectiveness of controls, not on comparative analysis of numerical data. In contrast, comparing information across different periods, benchmarking actual results against industry standards, and analyzing variances between expected and actual revenues are all analytical procedures. Each of these methods involves looking for trends, correlations, or discrepancies that can provide insights into the financial health and operational performance of an organization. By using these techniques, auditors can gather evidence that aids in forming an opinion on the financial statements.