When analytical procedures should be performed?

It is also mandatory that the auditor should perform analytical procedures near the end of the audit that assess whether the financial statements are consistent with the auditor’s understanding of the entity (ISA 520).

In which stage’s of an audit can analytical procedures be performed?

Analytical procedures are performed in the audit planning stage to help the auditor decide the other evidence needed to satisfy sufficient competent evidence requirements.

Why are analytical procedures performed?

Analytical procedures are used for the following purposes: To assist the auditor in planning the nature, timing, and extent of other auditing procedures. As a substantive test to obtain evidential matter about particular assertions related to account balances or classes of transactions.

Who performs planning analytical procedures?

Purpose of Analytical Procedures Auditors perform analytical procedures in various stages of the audit for three main purposes: To use as risk assessment procedures to obtain an understanding of the client and the risks that the client exposes to.

Why do we perform substantive procedures?

Substantive procedures are intended to create evidence that an auditor assembles to support the assertion that there are no material misstatements in regard to the completeness, validity, and accuracy of the financial records of an entity.

What are substantive analytical procedures?

Likewise, substantive analytical procedures are the audit procedures that auditors perform to obtain evidence about the reasonableness of amounts shown in the financial statements by using such plausible relationships among data.

What is substantive analytical procedure?

Substantive analytical procedures are used to obtain evidential matter about particular assertions related to account balances or classes of transactions. Final analytical procedures are used as an overall review of the financial information in the final review stage of the audit.

What is substantive procedure?

A substantive procedure is a process, step, or test that creates conclusive evidence regarding the completeness, existence, disclosure, rights, or valuation (the five audit assertions) of assets and/or accounts on the financial statements.

What are the types of analytical procedures?

Three types of analytical procedures commonly used by auditors are trend analysis, ratio analysis and reasonableness testing. a significant difference or threshold The auditor needs to determine a threshold that can be accepted without further investigation.

What are the typical types of analytical procedures?

Types of Analytical Procedure Audits

Ratio Analysis. Ratios are expressed as one financial statement data in relation to another.
Trend Analysis. Trend analysis refers to the comparison of a current balance with a previous year’s balance.
Reasonable Tests.
Model-Based Procedures.

What are examples of substantive analytical procedures?

Examples of substantive procedures are:

Bank confirmation.
Accounts receivable confirmation.
Inquire of management regarding the collectibility of customer accounts.
Match customer orders to invoices billed.
Match collected funds to invoices billed.
Observe a physical inventory count.
Confirm inventories not on-site.

What are the three main types of substantive procedures?

The three types of substantive tests are analytical procedures, a test of details of transactions, and tests of details of balances.

How are analytical procedures used in auditing?

Experienced auditors use analytical procedures in all stages of the audit. For example, analytical procedures may help the auditor during the planning stage to determine the nature, timing and extent of auditing procedures that will be used to obtain audit evidence for specific account balances or classes of transactions.

When should analytical procedures be performed during substantive testing?

When analytical procedures are performed during substantive testing, they are typically more focused and extensive than when performed as part of audit planning. Tests of controls should be performed after substantive tests of transactions.

What is the difference between analytical procedures and tests of controls?

Analytical procedures emphasize the overall reasonableness of transactions and balances. b. Tests of controls are concerned with evaluating whether controls are sufficiently effective to justify reducing control risk and thereby reducing analytical review procedures.

Are analytical procedures suitable for sales?

Suitability of analytical procedures, e.g. is performing analytical procedures on sale amount can assure the assertion of completeness, accuracy, or cutoff? Also, analytical procedures may not be suitable if the client’s internal controls are weak.