The auditor should apply

analytical procedures at the

planning stage and overall
review stages of the audit.
Analytical Procedures analysis of
significant ratios and trends including
the resulting investigation of
fluctuations and relationships that are
inconsistent with other relevant
information.
Purposes:
a. Assist the auditor in planning the
nature, timing, and extent of
other audit procedures
b. As substantive procedures when
their use can be more effective/
efficient that test of details
c. As an overall review of the
financial statements in the final
review stage of the audit.

In the overall review at the end of the

audit:
Conclusions drawn from the result of
the procedures are intended to
corroborate conclusions formed during
the audit of individual components.
Extent of Reliance: bases on the
expectation that relationships among
data exist and continue in the
absence of known conditions
FACTORS:
a. Materiality
b. Other audit procedures directed
toward the same audit objective
might confirm/dispel questions
from analytical procedures
c. Accuracy
d. Assessments of inherent and
control risk

PSA 520
In planning the audit:
ANALYTI
- Use both financial and nonfinancial information
CAL
- May indicate aspects of the
business of which the
auditor
PROCED
was unaware in determining the
nature, timing and extent
of
URES
other audit procedures.
As substantive procedures:
Substantive procedures to reduce
detection risk (may be derived from
test of details or analytical
procedures, or both)
Factors to consider (if analytical
procedures is used):
a. Objectives and extent to w/c
their result can be relied upon
b. Nature of the entity
c. Availability of information
d. Reliability of available
information
e. Relevance of available
information
f. Source of available information
g. Comparability of available
information
h. Knowledge gained during
Investigating Unusual Items:
previous audits
- Inquiries of management
- Corroboration of managements
responses
- Consideration of the need to
apply other audit procedures
Effective Date: December 31, 2003