Ann Marcus, CPA is performing an audit for Artistcraft Ltd. one of her clients, Artistcraft Ltd., a glass factory, for its December 31, 2020 year end. The audit program requires a substantive analytic procedure to be performed on the reasonableness of Artistcraft's interest expense on its long-term debt.

Ann has identified the following information:

Which of the following are true with respect to this analytic substantive procedure?

Long-term debt balance confirmed by the Lender in prior year file$1,545,861Long-term debt balance confirmed by the Bank in the current year$1,427,529Interest rate per the bank confirmation6.25%Balance per the general ledger$89,525Performance materiality$7,000

The balances of the long term debt and the interest rate are taken from bank confirmations which is external, third party evidence, and therefore highly reliable.

There is no need to need to consider the reliability of the underlying data when using analytics as substantive procedures.

This analytical procedure is a primary test of a balance, and therefore, it provides persuasive evidence.

If this is a persuasive analytical test, then no further substantive procedures need to be performed on the interest expense account.

The average loan balance is $1,486,695 and thisshould bemultiplied by the interest rate to determine the interest expense that must be recorded in the client's general ledger.

This test provides corroborative evidence.

If the auditor calculates interest expense should be $92,918, then the auditor needs to perform more work.