What Engagement Relies on Inquiries and Analytical Procedures?

Inquiries and analytical procedures ordinarily form the basis for which type of engagement?

A. Agreed-upon procedures.

B. Audit.

C. Examination.

D. Review.

Answer: B. Audit.

Explanation:

An audit involves a thorough examination of financial statements, including a detailed assessment of the underlying accounting records. This process heavily relies on inquiries to gather information from management and other personnel and analytical procedures to identify unusual trends, discrepancies, or potential misstatements. Both inquiries and analytical procedures are critical tools for auditors in forming their opinion on the fairness of the financial statements.