Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 24

What type of analysis is performed when an auditor tests for unusual variations in information by comparing the number of employees working at a factory site with the direct cost of production each month over a period of one year?

Answer options

Correct answer: C

Explanation

The correct answer is C, Regression analysis, as it identifies the relationship between variables, in this case, employee numbers and production costs. Trend analysis (A) examines data over time for patterns, ratio analysis (B) compares different financial metrics, and horizontal analysis (D) involves comparing financial data across periods, which does not specifically address the relationship between the two variables.