Analytical procedures: P7 Advanced Audit and...
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Auditors are required to perform risk assessment for the identification and assessment of risks of material misstatement at the financial statement and assertion level.The auditor is required to perform analytical procedures near the end of the audit to assess whether the financial statements are consistent with the auditor's understanding.Analytical procedures can be used in non-audit and assurance engagements, such as reviews of prospective financial information.The principals regarding the use of analytical procedures in such engagements are relevant.
Analytical procedures include evaluation of financial information through analysis of plausible relationships among both financial and non-financial data.There are identified fluctuations or relationships that are inconsistent with other relevant information or that differ from expected values by a significant amount.There is a basic premise behind the application of analytical procedures, which is that plausible relationships among data may reasonably be expected to exist and continue in the absence of conditions to the contrary.
Analytical procedures are used throughout the audit process.