1 Analytical Procedures Authority : ISA 520 - Analytical Procedures, Para.2 "The auditor should apply analytical procedures at the planning and overall.

Slides:



Advertisements
Similar presentations
Audit Evidence Week 11.
Advertisements

 COACHING CLASSES FOR COMMERCE STUDENTS: INTER COMMERCE 1ST YEAR 2ND YEAR ACCOUNTING BUSINESS MATHS STATISTICS  ECONOMICS BANKING B.COM classes PART.
Accounting Information Systems. JOIN KHALID AZIZ ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM. FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE.
Window dressing & false accounting
Valuation of Inventories: A Cost-Basis Approach
Accounting Principles
Advanced Auditing.
Bank Reconciliation Statement. JOIN KHALID AZIZ MA ECONOMICS EXTERNAL COACHING CLASSES. MA ECONOMICS EXTERNAL COACHING CLASSES. MICRO ECONOMICS, STATISTICS.
Slide # 1 STANDARD COSTING & VARIANCE ANALYSIS KHALID AZIZ FRESH CLASSES MA-ECONOMICS 15 TH FEBRUARY 2010.
5-1 McGraw-Hill/Irwin ©2002 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 5 Audit Planning.
CHAPTER 12 Audit Strategy in Response to Assessed Risks Fall 2007 u Designing Substantive Tests u Special Consideration in Designing Substantive Tests.
Chapter 6 Audit Evidence
Evidence By David N. Ricchiute
JOIN KHALID AZIZ ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM.
Lecture 8 Understanding entity and its environment
KHALID AZIZ Fraud Auditing KHALID AZIZ JOIN KHALID AZIZ ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM. FINANCIAL.
Inventories: IAS 2. JOIN KHALID AZIZ ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM. FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE B, B.COM, BBA,
1 Earnings per Share 2 JOIN KHALID AZIZ  ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM.  FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE B, B.COM,
AUDIT PROCEDURES. Commonly used Audit Procedures Analytical Procedures Analytical Procedures Basic Audit Approaches - Basic Audit Approaches - System.
1 The Master Budget 2 JOIN KHALID AZIZ ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM. FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE B, B.COM,
1 Khalid aziz**2010 Accruals and Deferrals: Timing is Everything in Accounting.
Performance Evaluation for Decentralized Operations & TRANSFER PRICING.
Basic Accounting Principles The Financial Statements.
Accounts Receivable, Inventory, and Total Quality Management.
1 - 1 The Accountant’s Role in the Organization JOIN KHALID AZIZ l ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM. l FINANCIAL ACCOUNTING OF ICMAP.
Investments in Associates: IAS 28
Just-In-Time Manufacturing. JOIN KHALID AZIZ  FRESH CLASSES  ICMAP STAGE 3  COST ACCOUNTING PERFORMANCE APPRAISAL  18 TH FEBRUARY 2010  INDIVIDUAL.
Throughput Accounting
Part Seven Sales And Receivable Audit. Structure of Seminar 1. Control objective and Control procedures 2. Tests of control 3. Substantive tests 4. Trade.
KHALID AZIZ PARTNERSHIP JOIN KHALID AZIZ COACHING CLASSES ICMAP STAGE 1,2,3,4,5 ICAP MODULE A,B,C,D PIPFA BBA & MBA B.COM & M.COM ACCOUNTING.
UTILITY ANALYSIS Utility is the Power of a Commodity to satisfy human wants. There are two different Approaches to Utility Analysis Cardinal approach to.
ANALYTICAL PROCEDURES SECTION 7
ACCT: 742-Advanced Auditing
EOQ Model Economic Order Quantity. JOIN KHALID AZIZ ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM. FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE.
Audit objectives, Planning The Audit
1 Designing Substantive Procedures The auditor “must plan and perform the audit to reduce the audit risk to an acceptably low level that is consistent.
INTERNATIONAL STANDARD ON AUDITING 570
Auditing Sept. 24, Audit Standards Page 38.
Evidence and Documentation
[Hayes, Dassen, Schilder and Wallage, Principles of Auditing An Introduction to ISAs, edition 2.1] © Pearson Education Limited 2007 Slide 8.1 Control Risk,
1 Topic# 6 – Analytical Procedures Readings, pages 89-90,202 & Authority : ISA Analytical Procedures, Para.2 "The auditor should apply analytical.
1 Absorption and marginal costing. 2 JOIN KHALID AZIZ FRESH CLASSES FOR ICAP MODULE D…COST ACCOUNTING REGISTER YOUR SELF NOW COMPLETION OF SYLLABUS WITH.
AUDITING THE REVENUE CYCLE AND RELATED ACCOUNTS
S14: Analytical Review and Audit Approaches. Session Objectives To define analytical review To define analytical review To explain commonly used analytical.
Hawthorne Studies. JOIN KHALID AZIZ ECONOMICS OF ICMAP, ICAP, MA- ECONOMICS, B.COM. FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE B, B.COM, BBA,
13 February 2002AC312 Auditing Lecture 51 AC312 AUDITING Lecture 5. Final Audit Work: Analytical Procedures, Fixed Assets and Debtors.
Audit Risk and Audit Evidence
KHALID AZIZ R-1173, AL-NOOR SOCIETY, BLOCK 19, F.B.AREA, KARACHI.
KHALID AZIZ 0322* The Measurement Fundamentals of Financial Accounting.
Introduction to Law.
Chapter 5 Evidence and Documentation McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Analytical Review and Audit Approaches
Copyright © 2007 Pearson Education Canada 1 Chapter 11: Overall Audit Plan and Audit Program.
Evidence and Documentation
1 GOING CONCERN INTERNATIONAL STANDARD ON AUDITING 570.
AUDIT QUALITY AND ASSURANCE 2 ND AND 3 RD OCTOBER 2014 HILTON HOTEL ANALYTICAL PROCEDURES 1.
P7:Advanced Audit & Assurance (INT). 2 Section D: Audit of Historical Financial Information Designed to give you knowledge and application of: D1. i.
F8: Audit and Assurance. 2 Designed to give you knowledge and application of: Section A: Audit Framework and Regulation Section B: Internal audit Section.
Auditing & Investigations II
Granite Shoals, Texas Audit Presentation September 30, 2016
Introduction to Management Accounting
Types of tests Risk Assessment Procedures – Auditors use the results of risk assessment procedures to determine the type and amount of further audit.
Question 4-1 Which of the following statements concerning noncompliance by clients is correct?    A.  An auditor's responsibility to detect noncompliance.
UTILITY ANALYSIS Utility is the Power of a Commodity to satisfy human wants. There are two different Approaches to Utility Analysis Cardinal approach to.
Developing the Overall Audit Plan and Audit Program
PARTNERSHIP JOIN KHALID AZIZ COACHING CLASSES ICMAP STAGE 1,2,3,4,5
Management Fraud and Audit Risk
Flexible Budgets and Variance Analysis.
Evidence and Documentation
AUDIT TESTS.
Presentation transcript:

1 Analytical Procedures Authority : ISA Analytical Procedures, Para.2 "The auditor should apply analytical procedures at the planning and overall review stages of the audit. Analytical procedures may also be applied at other stages."

2 JOIN KHALID AZIZ MA-ECONOMICS B.COM, COACHING CLASSES ICMAP STAGE 1,2,3,4..& CAM ICAP MODULE A,B,C,D PIPFA CAT & ACCA BBA & MBA BA-ECONOMICS INTER COMMERCE R-1173, ALNOOR SOCIETY BLOCK 19, F.B.AREA, KARACHI.

3 Definition – AP involves the analysis of relationships between: a) items of financial data, or between items of financial and non-financial data, deriving from the same period; or b) comparable financial information deriving from different time periods to identify consistencies and predicted patterns or significant fluctuations and unexpected relationships, and the results of investigation thereof.

4 Types of AP Simple Trend Analysis (of one account) Ratio analysis –Trend Analysis –Comparative Analysis –Common-sized analysis Reasonableness tests

5 How to apply AP Develop expectation Determine acceptable difference from expectation Compare account balance with expectation Investigate significant differences

6 When to apply AP Analytical procedures can be applied to all the stages of the audit i.e. planning, fieldwork and final review.

7 Planning stage At the planning stage, they serve to identify areas of potential audit risk and help in planning the nature, timing and extent of other procedures.

8 Application of AP in Planning 1.Acquire the last audited financial statements 2.Acquire any projected financial statements or budgets established by management or perform some projections incorporating trend analysis (i.e. using the previous audited financial statements) 3.Compare the projections from 1. above with the client’s current un-audited financial statements to identify ratios/relationships that are out of sink.

9 Fieldwork Stage AP is used at this stage to obtain evidence about the financial statement account balances.

10 Fieldwork Stage e.g. #1 One may wish to verify the reasonableness of recorded credit sales. A reasonableness test could be applied where the auditor uses a debtors control account. He could add the all the cash received from debtors to the closing debtors figure and then subtract the opening debtors figure. He would then compare this result to the recorded credit sales figure.

11 Fieldwork Stage e.g. #2 One may wish to verify the reasonableness of recorded payroll expenses. A reasonableness test could be applied where the auditor determines the average pay per employee in each category. He would next determine the number of employees for the said categories. He would finally multiply these two figures for each category, sum all the categories and then compare this result to the recorded payroll expenses figure

12 Fieldwork Stage e.g. #3 One may wish to verify the reasonableness of recorded production costs in a manufacturing entity. E.g. the auditor wants to determine whether job No. 123 which has 950 direct labour hours really resulted in the recorded production costs of $42,000. A regression analysis could be applied. (Recall that : y = a + bx ).

13 Fieldwork Stage e.g. #3 (cont’d) Suppose that based on previous data, the following equation had been developed for matching production costs against labour hours: y = x where y = production costs and x = labour hours Job No. 123 should carry production costs of (950) = $45,653.27

14 Fieldwork Stage e.g. #3 (cont’d) This figure of $45, exceeds the $42,000 recorded in the general ledger. As a result of this difference, additional inquiries and audit procedures may be necessary to determine if the difference is reasonable or if perhaps an error or fraud has occurred.

15 Final Review Stage AP is used at this stage to help the auditor assess the adequacy of substantive tests performed, the sufficiency of the evidential matter obtained and the validity of the conclusions reached, including the opinion on the financial statements taken as a whole.

16 JOIN KHALID AZIZ MA-ECONOMICS B.COM, COACHING CLASSES ICMAP STAGE 1,2,3,4..& CAM ICAP MODULE A,B,C,D PIPFA CAT & ACCA BBA & MBA BA-ECONOMICS INTER COMMERCE R-1173, ALNOOR SOCIETY BLOCK 19, F.B.AREA, KARACHI.