Which procedures would an auditor most likely perform in planning a financial statement audit?

• A. Inquiring of the client's legal counsel concerning pending litigation.
• B. Comparing the financial statements to anticipated results.
• C. Examining computer-generated exception reports to verify the effectiveness of internal controls.
• D. Searching for unauthorized transactions that may aid in detecting unrecorded liabilities.

Answer: (B)

Analytical procedures used in planning help establish expected amounts and spot anomalies. Comparing the financial statements to anticipated results, such as budgets, forecasts, or prior-period performance, is a classic planning-stage activity. It creates a baseline expectation and highlights unusual or unexpected relationships that signal where to focus further audit effort, shaping the overall strategy, timing, and extent of procedures. The other options are more aligned with evidence gathering or testing after planning: inquiries of legal counsel relate to assessing contingencies and litigation risk, testing controls by examining exception reports evaluates internal-control effectiveness, and searching for unauthorized transactions targets fraud risk and unrecorded liabilities through substantive testing.