Do auditors use financial statement analysis$$ techniques? Explain.

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Part $1$

A$.$

Yes. Auditors sometimes use financial statement analysis techniques to obtain additional information regarding what is occurring in a company. For$$ example, an auditor may ask management to see its bank statements in order to verify net income.$$

B$.$

No$.$ Auditors do not use financial statement analysis techniques. Auditors rely on the opinions of management to make assessments.

C$.$

Yes. Auditors will use several types of financial statement analysis techniques to obtain an overview of what is occurring in a company. For$$ example, if an auditor observes that accounts receivable are increasing as a percent of total$$ assets, they may seek additional information such as whether sales are also$$ increasing, whether collections are$$ decreasing, or whether credit extension practices have been relaxed.$$

D$.$

No$.$ Auditors do not rely on financial statement analysis techniques when auditing. Auditors will typically use IRS guidelines to assess the accuracy of financial information.