Which of the following is not an example of a substantive analytical procedure to test the Accounts Receivable account, Accuracy, Valuation & Allocation assertion?

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To approach this question, I will evaluate what constitutes a substantive analytical procedure versus other audit techniques in testing the Accounts Receivable balance and its Accuracy, Valuation & Allocation.
Option 1: Confirming recorded accounts receivable directly with customers. This is a substantive test of details, specifically existence and accuracy, because it involves obtaining external evidence about specific account balances. It is not an analytical procedure, which would typically involve ratio analysis, trend analysis, or other high-level computations to identify anomalies.
Option 2: Analyzing the accounts receivable turnover ratio for indicators of potential misstatement. This clearly fits the definition of an analytical procedure: it uses ratios and trend information to assess whether the balance and related performance metrics are plausible, signaling possible misstatements that require further investigation.
Option 3: Computing the percentage of management’s recorded Uncollectable Allowance to total Accounts Receivable and comparing this percentage to prior years. This is another form of analytical procedure, using a ratio of allowance to receivables and a historical comparison to detect unusual fluctuations that could indicate misstatement or estimation bias in the valuation allowance.
Option 4: Developing an estimate of the uncollectable allowance amount based on information regarding customer demographics and historical collection data. While this involves estimation, it aligns with analytical procedures aimed at valuation by projecting expected uncollectibles from historical data and demographics, to assess whether the allowance is reasonable and consistent with observed collection patterns.
In summary, the only option that does not constitute an analytical procedure is the first one, which is a direct confirmation of balances from third parties and falls under substantive audit procedures focused on detailed account verification rather than analysis across data.

ACCT:4100:0001 Fall25 Final Exam- Requires Respondus LockDown Browser

Which of the following is not an example of a substantive analytical procedure to test the Accounts Receivable account, Accuracy, Valuation & Allocation assertion?

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