What are substantive analytical procedures in auditing?
Substantive analytical procedures are used to obtain evidential matter about particular assertions related to account balances or classes of transactions. Final analytical procedures are used as an overall review of the financial information in the final review stage of the audit.
Why auditors use analytical procedures in performing the audit tasks?
Analytical procedures are used for the following purposes:
- To assist the auditor in planning the nature, timing, and extent of other auditing procedures.
- As a substantive test to obtain evidential matter about particular assertions related to account balances or classes of transactions.
Are substantive analytical procedures allowed to be used as audit evidence?
Analytical Procedures Used as Substantive Tests. For significant risks of material misstatement, it is unlikely that audit evidence obtained from substantive analytical procedures alone will be sufficient. (See paragraph . 11 of AS 2301, The Auditor’s Responses to the Risks of Material Misstatement.)
What are examples of substantive analytical procedures?
Examples of substantive procedures are:
- Bank confirmation.
- Accounts receivable confirmation.
- Inquire of management regarding the collectibility of customer accounts.
- Match customer orders to invoices billed.
- Match collected funds to invoices billed.
- Observe a physical inventory count.
- Confirm inventories not on-site.
How are substantive analytical procedures used?
Use of substantive analytical procedures
- STEP 1: Develop an independent expectation.
- STEP 2: Define a significant difference (or threshold)
- STEP 3: Compute difference.
- STEP 4: Investigate significant differences and draw conclusions.
What are the five major types of analytical procedures in auditing?
Typically, five types of audit procedures normally use by auditors to obtain audit evidence. Those five audit procedures include Analytical review, inquiry, observation, inspection, and recalculation.
What is the difference between analytical procedures and substantive procedures?
Substantive tests, aka tests of balances, are more statistical driven and really dig into the details of the balances themselves. Analytical Procedures ARE $ubstantive Procedures. Notice the S in substantive. There are two main types of activities auditors perform–tests of internal controls and $ubstantive testing.
What are the different types of analytical procedures?
Three types of analytical procedures commonly used by auditors are trend analysis, ratio analysis and reasonableness testing. a significant difference or threshold The auditor needs to determine a threshold that can be accepted without further investigation.
