Analytical Procedure

Question 1

Analytical procedure is?

Answer 1

Evaluation of financial information
Through comparison and plausible relationship
+ investigation

Question 2

Example of Analytical procedure

Answer 2

Comparison
Prior period
Industry
Budget
Comparable parts of same entity (branches k sath)

Question 3

Plausible relationship example

Answer 3

With financial (sales to A/C rec)
With non financial (payroll to number of employees)

Question 4

Uses/purpose of Analytical procedure

Answer 4

Planning - To obtain understanding
To assess risk

Substantive procedures - to detect misstatement

Overall review - to determine f/s are consistent with understanding

Question 5

Use of analytical procedures as substantive procedures

Answer 5

1. Determine suitability