Question

True or false: According to AICPA (2008) guidance, the development of an expectation is the most important step when using analytical procedures.

Answer 1

Answer:

True

Explanation:

Forming an expectation is the most important phase of the analytical procedure process. The more precise the expectation (that is, the closer the auditor's expectation is to the correct balance or relationship), the more effective the procedure will be at identifying potential misstatements.