CISA Information System Auditing Process Practice Question
During an operational audit, the auditor uses ratio analysis to compare current year expenses to prior years and industry benchmarks. This is an example of which type of audit evidence?
⚠ Common exam trap
CISA often tests the distinction between analytical procedures and other evidence-gathering techniques like inquiry, observation, and inspection; candidates may confuse ratio analysis with inspection because both involve examining data, but inspection focuses on individual records while analytical procedures focus on relationships and trends.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
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Analytical procedures
Analytical procedures involve evaluating financial information by analyzing plausible relationships among both financial and non-financial data. Ratio analysis comparing current expenses to prior years and industry benchmarks is a classic analytical procedure used to identify unusual fluctuations or trends. This type of evidence is indirect but highly effective for risk assessment and substantive testing. Under ISACA standards, analytical procedures are a key method for obtaining audit evidence.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
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Analytical procedures
Why this is correct
Ratio analysis compares financial and operational data across periods and against benchmarks, which is the defining characteristic of analytical procedures. It evaluates relationships and trends rather than testing individual transactions or controls, satisfying the audit objective of identifying unusual variances warranting further investigation.
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Inquiry
Why it's wrong here
Inquiry gathers evidence through interviews and written questions posed to personnel; ratio analysis involves the auditor's own computational comparison of financial data. It is tempting because inquiry is a common evidence type, but it would be correct when corroborating controls through management explanations rather than analytical comparison.
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Observation
Why it's wrong here
Observation means watching a process or procedure being performed, such as witnessing a physical inventory count. It is tempting because auditors frequently observe operations, but it would be correct when verifying how activities are actually carried out, not when computing and comparing financial ratios across periods.
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Inspection
Why it's wrong here
Inspection examines physical assets or documents, such as reviewing invoices or counting inventory. It is tempting because examining records is routine audit work, but it would be correct when verifying existence or accuracy of specific documents, not when performing analytical comparison of expense ratios against benchmarks.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official ISACA exam blueprint
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