What are the analytical procedures?

Analytical procedures are part of the financial audit process. The auditors use these procedures to test financial information prepared by the client. During the testing phase, the auditors rework the information to ensure that they are accurate and adhere to the national accounting standards. Some commonly used types of analytical procedures include: Comparing current information with previous accounting periods, calculation of financial conditions and requesting information from external sources to be compared with internal records of the company. Auditors can use one or all these procedures for testing the client's financial information.

Historical reviews of accounting papers allow auditors to create a standard level of expectations for the client. Auditors who perform several repeated audits will usually have a clearer picture of what the client's information should look like. When using analytical procedures to compare information such as sales, bland accounts, various expenditure other items, auditorsThey can determine whether there are financial information. Auditors usually use these procedures to check specific accounts or other selected parts of the client's paperwork or information.

Financial conditions help the auditors work through the review of information by testing information directly from the client's financial statements. The analytical procedures using financial conditions allow the auditors to quickly determine whether the company has current financial information, which is significantly different from previous periods. Another way to use financial conditions is to compare the company's information to external resources. This use of analytical procedures ensures that society does not differ significantly from others in the same industry. The main differences in the company's financial conditions may indicate incorrect accounting procedures to which the financial information is subject to.

Another use of analyticalThe procedures are to ask for information from the client's customers to compare to the company's internal records. This part of the process often focuses on receivables, payable accounts or bank information. The auditors send an official letter applying for the client publishing the balances concerning these accounts, and then the auditors compare this information with the same month in the client's book. If there are differences between the two numbers, the auditors will have to dig deeper into the book and discover the reason for the differences.

There are other types of analytical procedures to be used with paperwork of their client. The auditors will use all procedures they consider necessary in the audit. The proposal and plan of these procedures usually come from the audit plan. This plan determines the size of the sample needed to test information and procedures that best identify problems in financial paperwork.