Answered: Discuss the objective of analytical…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Discuss the objective of analytical procedures used in the overall review stage of the audit.

Expert Solution

Step 1

Analytical procedures are one of the two types of substantive audit procedures. They evaluate the relationship among the financial data to determine if financial statement information is materially correct. Analytical procedures are a type of evidence used during an audit. These procedures can indicate possible problems with the financial records of a client. Analytical review assumes these financial relationships are stable from period to period. Analytical procedures are used

To assist the auditor in planning the nature, timing & extent of other auditing procedures.
As a substantive test to obtain evidential matter about particular assertions related to account balances or classes of transactions.