Analytical procedures are substantive procedures that may be used to provide evidence about specific accounts and classes of transactions.a. Describe three major types of comparisons the auditor might make in performing analytical procedures.b. At what stages of the audit are analytical procedures performed and what purpose do they serve at each stage?
What will be an ideal response?
a. Comparisons made in performing analytical procedures include (only three required):Comparisons with prior years' data.
Comparisons with budgets and forecasts.
Comparisons with industry statistics.
Comparisons with nonfinancial data.
Comparisons of predictable relationships based on past history.
b. Analytical procedures may be performed:
1. During risk assessment to identify items that require more audit attention (required analytical procedures).
2. Throughout the audit as a substantive procedure for accounts or classes of transactions.
3. Near the end of the audit to corroborate audit evidence obtained during the audit to assist the auditor in drawing reasonable conclusions (required analytical procedures).
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