Preliminary Analytical Procedures Can Best Be Described as Substantive

Cases analytical procedures can be more effective or efficient than tests of de-tails for achieving particular substantive testing objectives. The auditors substantive procedures at the assertion level may be tests of details substantive analytical procedures or a combination of both.

Substantive Procedure In Audit Definition Examples Types

F If a clients long-lived assets involve only a few assets of relatively high value it might be most efficient to test long-lived assets by using only substantive tests of details.

. Analytical procedures in this stage of audit are usually referred to as substantive analytical procedures. Auditors use substantive analytical procedures to gather information and determine if they need to conduct substantive testing. Information to develop this estimate can be obtained from all of the following except a.

2 marks ii the different types of analytical procedures available to the auditor. The current standards permit but still do not require the use of analytical procedures as substantive tests but auditors commonly use them to achieve audit efficiency in two ways. The decision about which audit procedures to perform including whether to use.

Q1 Analytical procedures are used at the planning state to identify risk areas that need hte auditors attention. Substantive Analytical Procedures Ref. I what is meant by the term analytical procedures.

01 This section addresses the auditors use of analytical procedures as substantiveproceduressubstantiveanalyticalproceduresItalsoaddresses the auditors responsibility to perform analytical procedures near the end of the audit that assist. Analytical procedures can best be categorized as a. And 3 marks iii the situations in the audit when analytical.

Analytical procedures also encompass investigation of identified fluctuations or relationships that are inconsistent with other relevant information or that differ from expected values by a significant amount. Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Revised March 2006 to reflect conforming changes necessary due to the issuance of Statement on Auditing Standards No.

Which of the following statements best describes the circumstances associated with the client being audited. Analytical procedures are a type of substantive test sometimes called substantive analytical procedures. In some cases analytical procedures can be more effective or efficient than tests of details for achieving particular substantive testing objectives.

Blockchain solution in the audit. Analytical procedures also encompass such investigation as is necessary of identified fluctuations or relationships that are inconsistent with other relevant information or. List the substantive audit procedures that may be performed by an auditor to.

Analytical procedures are used as a substantive test to obtain evidential matter about particular assertions related to account balances or classes of transactions. 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. All of the above could be performed as part of preliminary analytical procedures.

The AICPAs auditing standards define analytical procedures as evaluations of financial information through analysis of plausible relationships among both financial and nonfinancial data. On the other hand when the word primary analytical procedures is used it usually refers to analytical procedures that are performed at the planning stage of the audit to assess the risk and direct auditors attention to the high-risk. When performing preliminary analytical procedures the auditor should not typically expect the client to use depreciable lives similar to organizations in the same industry.

Applying ratio analysis to extermnally generate data such as published industry statistics or price indices. Assume that the auditor decides to only perform substantive tests of details when auditing the equipment account. Preliminary analytical review has been defined as both analytical procedures and management inquiry procedures applied during the planning stage of the audit.

10505 Analytical procedures involve comparisons of recorded amounts or. Is performing analytical procedures on sale amount can assure the assertion of completeness accuracy or cutoff. Likewise in performing substantive analytical procedures auditors need to consider a number of factors below.

2 substantive analytical procedures Analytical procedures are used as substantive procedures when the auditor considers that the use of analytical procedures can be more effective or efficient than tests of details in reducing the risk of material misstatements at the assertion level to an acceptably low level. With reference to ISA 520 Analytical Procedures explain. Comparing recorded financial information to the results of other tests of transactions and balances.

Substantive audit procedures for some account balances and account transactions. Auditors conduct risk assessments known as preliminary analytical reviews to plan and time their strategies for conducting an initial analysis. Suitability of analytical procedures eg.

Effective for audits of financial statements for periods ending on or afterDecember152012. The substantive analytical procedure known as trend analysis is best described by a Development of a model to form an expectation using financial data nonfinancial data or both to test account balances or changes in account balances between accounting periods. Scope of This Section.

1 to corroborate substantive tests of details for the same assertion thereby enabling a reduction in the scope of the tests of details for example by lowering the sample size. Within the risk assessment standards auditors are required to perform risk assessment procedures that include analytical procedures and management inquiries. 7-Referencing the article you read on the AICPA Blue Sky paper potential opportunities of audit data analytics includes.

To help plan the nature timing and extent of substantive auditing procedures preliminary analytical procedures should focus on. Preliminary analytical review. It is useful to note that the word substantive analytical procedures refers to analytical procedures that are performed as a substantive test.

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