Analytical Review Procedures

In addition to the audit procedures discussed above, the following analytical review procedures may often be helpful as a means of obtaining audit evidence regarding the various assertions:

  1.  comparison of closing balances of loans and borrowings, creditors, etc., with the corresponding figures for the previous year;
  2.  comparison of the relationship between current year creditor balances and the current year purchases with the corresponding figures for the previous year;
  3.  comparison of actual closing balances of loans and borrowings, creditors, etc., with the corresponding budgeted figures, if available;
  4.  comparison of current year’s aging schedule of creditors with the corresponding figures for the previous year;
  5. comparison of significant ratios relating to loans and borrowings, creditors, etc., with the similar ratios for other firms in the same industry, if available;
  6. comparison of significant ratios relating to loans and borrowings, creditors, etc. with the industry norms, if available.

It may be clarified that the foregoing is only an illustrative list of analytical review procedures which an auditor may employ in carrying out an audit of liabilities. The exact nature of analytical review procedures to be applied in a specific situation is a matter of professional judgement of the auditor

(Visited 2 times, 1 visits today)
Share this:

Written by