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Analytical Procedures Report - Essay Example
Finance & Accounting
Pages 6 (1506 words)
REPORT: ANALYICAL PROCEDURES ANALYTICAL PROCEDURES: The assessment of financial information made through analyzing plausible relationships among the financial and non-financial information and data is called Analytical Procedures. These procedures include the comparison of the financial data of the company with financial information of prior periods, the expected results of the entity such as mentioned in forecasts, the auditor’s expectation or the financial information of other companies in the same industry in which the company operates…
While auditing a client, the analytical procedures are performed by the auditor at all stages of the audit. In planning stage, the analytical procedures are performed to gain a better understanding of the entity and identify and assess any risks that contradict the auditor’s basic understanding of the entity. At performance stage, the analytical procedures are performed as substantive procedures. The use of substantive analytical procedures during the audit increases the efficiency of the audit. The auditor shall also perform analytical procedures near the audit end. Those procedures will help the auditor to form an overall conclusion to evaluate whether the Financial Statements of the entity are consistent with the understanding of the auditor about the entity. During the audit, the analytical procedures may be applied by the auditor on the assertions of Completeness, Existence, Classification and Accuracy. Analytical procedures may be performed through various methods. These methods include simple comparisons and also complex mathematical and statistical analyses using advanced statistical formulae. ...
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