Audit and Assurance Practice Exam 2025 – Complete Prep Resource

Substantive analytical procedures are employed to evaluate financial information by studying plausible relationships among financial and non-financial data. This process involves developing expectations for account balances or ratios based on historical data, industry trends, or other relevant factors, and then comparing those expectations to the actual recorded amounts to identify any significant discrepancies that may indicate potential misstatements or anomalies.

This approach is particularly useful in the audit process, as it allows auditors to use their understanding of the business and the economic environment to assess the reasonableness of account balances. By examining these relationships, auditors can gain insights into the financial performance and position of an entity, which aids in forming an opinion on the financial statements.

This method contrasts with other choices, such as evaluating compliance with audit standards or summarizing audit findings, which do not focus specifically on analyzing financial information nor do they serve the purpose of identifying discrepancies through relational analysis.