The analytical procedures can be described as ‘evaluating the financial records by analyzing the credible relationship between the financial records and non-financial records’. It can be also included that ‘such analysis is mandatory to identify the difference or inconsistency of relevant data or the difference between provided data and the estimated values’ (ISA/HKSA 520(4)). The basic principle to apply the analytical procedures is the expected existence of the credible relationship may occur and the analytical procedures may carry on in such circumstances in the non-appearance of the opposite factors.
Defining the purposes
Auditors use analytical procedures in the entire audit course to achieve the three main purposes of audit:
1) Preliminary analytical review
These are the introductory analytical reviews, which assist the auditors to get an idea about the business and industry. They can start with reviewing the previous financial records, performance of industry and the competitors. This will lead them to decide the nature of audit, the time period required and the level of analytical procedures. Basically, preliminary analytical reviews help to design the strategies and plans to conduct the audit. 2) Substantive analytical procedures Auditors can use the analytical procedures substantively. If the auditors feel that their analytical procedure can bring more accurate results rather than using different tests, so they usually reduce the level of tests to identify the misstated facts of the financial records. These procedures will be known as substantive analytical procedures. 3) Final analytical reviews Financial records are analyzed thoroughly by the auditors through analytical procedures, which lead the independent individuals towards the outcomes whether records are accurate or in compliance with auditors’ understanding. So analytical procedures are applied finally to analyze the facts but these procedures are not executed to get hold of the extra substantive analysis. In such case, if auditors find any inconsistency in the records, they must repeat the risk assessment procedure and if they feel the need of extra analytical procedures, they can go for it. Substantive analytical procedures usage Acquiring the evidence of audit that must be reliable and appropriate is one of the basic points of analytical procedures. While applying the procedures of substantive analytics, auditors need to acquire the guarantee with the assistance of other auditing tools and controls. These tools and controls help the auditors to evaluate the results of different sections after applying analytical procedures. Such analytical procedures have ability to cover a wider range of transactions that is why procedures of substantive analytics are normally used to analyze the financial records. As it is briefly told that the auditors apply substantive analytical procedures on the expected existence of the credible relationship between financial data and they may carry on this analytical procedure in case of non-appearance of contrary factors. The existence of relationship between the data provides the base of audit evidence that leads the auditors to
It is necessary for the auditor to perform effective steps for risk assessment to identify the risks regarding the misstated data in the financial records, the affirmation level and auditor should use the analytical procedures for the risk assessment. …
As the role of the auditor comes increasingly below the highlight pursuing up to date global financial instability, it is believed that it is essential that the accountancy occupation re evaluate the role of audit and guarantee and approach up with positive, realistic approach which both can help in developing and maintain profitable business.
Overview Basel II was launched in order to make the financial system more risk sensitive and to improve the capabilities of the financial institutions to actually improve their robustness and ability to cope with the extreme situations. However, the current economic crisis has put a big question mark over the ability of the Basel II framework to put an effective check over the behavior and practices of the financial institutions.
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An income statement provides one with an accurate description of the company’s profitability over a set period of time. It could be described as an accounting statement that matches a company’s revenues with its expenses over a given period of time usually a quarter or a year.
Translation Exposure is also known as accounting exposure, which is used to measure the impact of fluctuation of international currencies on the balance sheet of a company. Whenever the currency appreciate (over valued) or
The paper highlights certain troubles caused by the variation in perceptions of risk by different corporate houses. The importance of risk assessment is evaluated through a qualitative research, by putting forward some risk theories. Quantitative approach is also undertaken as the risks are quantified.
The main idea of the paper is that it proposes an efficient risk assessment toolkit that will highlight the importance of the IT infrastructure for the non-profit organizations. Every organization possesses certain assets like data, policies and procedures etc that
nced time table that will incorporate all my academic units as well as other aspects of daily life such as allocating time for personal hygiene and grooming, sleep and resting time, class attendance and personal study time. I have identified that allocating a personal study time
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