The audit manager asked the internal auditor to perform additional testing because several irregularities were found in the financial information. Which of the following would be the most appropriate analytical review for the auditor to perform?
A.
Compare the firm's financial performance with organizations in the same industry
B.
Interview all managers involved in preparing the financial statements
C.
Perform a bank reconciliation to confirm the cash balance in the financial statements.
D.
Trace each financial transaction to the original supporting document
When several irregularities are found in the financial information, it is critical to perform an analytical review that provides a broader perspective on the firm's financial health. Comparing the firm's financial performance with organizations in the same industry helps identify anomalies and trends that may indicate irregularities. This benchmarking approach can highlight unusual deviations from industry norms, which may signal errors or potential fraud. References:
"Internal Auditing: Assurance & Advisory Services" (The Institute of Internal Auditors)
"Auditing and Assurance Services" (Messier, Glover, Prawitt)
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