What is the objective in performing analytical review procedures? The objective of analytical procedures used in the overall review stage of the audit is to assist the auditor in assessing the conclusions reached and in the evaluation of the overall financial statement presentation.
What are analytical review procedures? The accounting profession defines analytical review procedures as, ”evaluations of financial information through analysis of plausible relationships among both financial and non-financial data.
” The underlying premise of analytical review is certain stable relationships exist among financial and non-financial data.
What is the purpose of performing preliminary analytical procedures in audit planning? Preliminary analytical reviews are performed to obtain an understanding of the business and its environment (eg financial performance relative to prior years and relevant industry and comparison groups), to help assess the risk of material misstatement in order to determine the nature, timing and extent of audit
What is the primary objective of analytical procedures performed during the planning stages of an audit? Auditors perform analytical procedures in the planning stage of an audit for the purpose of: Identifying unusual conditions that deserve more auditing effort.
What is the objective in performing analytical review procedures? – Related Questions
What are analytical procedures give two examples of how analytical procedures can be used?
Examples of analytical procedures are as follows:
Compare the days sales outstanding metric to the amount for prior years.
Review the current ratio over several reporting periods.
Compare the ending balances in the compensation expense account for several years.
Examine a trend line of bad debt expenses.
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What is the purpose of analytical procedures?
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.
What do you mean by analytical procedures?
Analytical procedures are one of many financial audit processes which help an auditor understand the client’s business and changes in the business, and to identify potential risk areas to plan other audit procedures.It is also the evaluation of financial information made by a study of plausible or credible
What are the five steps involved with the use of preliminary analytical procedures?
What are the five steps involved in analytical procedure
What is the purpose of performing final analytical procedures?
Purposes of analytical procedures
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.
When should the auditor use analytical procedures?
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. Analytics also come into play at the end of the audit.
What is the difference between substantive procedures and analytical procedures?
Substantive procedures are reviews of documents for a “substantial portion” of account activity, while analytical procedures include controls test and test relying on mathematical relationships reflectinb accounting mechanics, contractual provisions [debt times interest rate], or business capabilities [production per
When applying analytical procedures during an audit which of the following is the best approach?
When applying analytical procedures during an audit, which of the following is the best approach for developing expectations
What are the test of controls in an audit?
A test of control describes any auditing procedure used to evaluate a company’s internal controls. The aim of tests of control in auditing is to determine whether these internal controls are sufficient to detect or prevent risks of material misstatements.
What are the three types of substantive tests?
The three types of substantive tests are analytical procedures, a test of details of transactions, and tests of details of balances.
How do you perform substantive analytical procedures?
In performing substantive analytical procedures, document the following:
The reliability of the data. Document why you believe the data is trustworthy.
Assessed risk of material misstatement by assertion.
Expectation.
Approach.
Acceptable difference.
Conclusion.
Which of the following is not an analytical procedure?
Tracing of purchases recurred in the purchase book to purchase invoices.
Which of the following statements concerning analytical procedures is true?
Answer (B) is correct . Analytical procedures applied in planning the audit focus on enhancing the understanding of the business and the transactions and events since the last audit, identify areas that may represent specific audit risks, and ordinarily use data aggregated at a high level.
When should analytical procedures be used?
The use of analytical procedures is also required near the end of an audit for retrospectively assessing the adequacy of the audit scope, and possibly identifying a previously unrecognized risk of material misstatement, before forming an overall conclusion on the financial statements (AU-C 520.
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What does analytical mean in accounting?
In business, analytical accounting is a name for the financial component of project management. It relies on financial data to make determinations about how, when and why a business spends and receives money.
How do you test for reasonableness?
The reasonableness standard is a test which asks whether the decisions made were legitimate and designed to remedy a certain issue under the circumstances at the time. In law, the reasonableness test is performed by assessing a legal dispute or issue through the eyes of a “reasonable person”.
