Auditors use analytical procedures to test financial information and ensure it meets accounting standards. These procedures include comparing information with previous periods, calculating ratios, and soliciting information from external sources. Auditors use these procedures to identify irregularities and inappropriate accounting procedures.
Analytical procedures are part of the financial audit process. The auditors use these procedures to test the financial information prepared for the client. During the testing phase, the auditors review the information to ensure that it is accurate and meet the national accounting standards. Some types of commonly used analytical procedures include: comparing actual information with previous accounting periods, calculating financial ratios and soliciting information from external sources to compare with the company’s internal registers. Auditors may use one or all of these procedures to test a client’s financial information.
The historical revisions of the accounting paper allow auditors to create a standard level of expectation for a client. Auditors who perform various repetitive auditions will generally tend to have a clearer image of how the client’s information should be served. When analytical procedures are used to compare information such as sales, unbearable accounts, various gastoses and other elements, the auditors can determine if there are irregularities in the financial information. Auditors generally use these procedures when reviewing specific accounts in other selected parts of the client’s documentation or accounting information.
The financial indexes help the auditors to work through a review of the information by probing information directly about the client’s financial status. The analytical procedures that use financial indices allow auditors to quickly determine whether the company has current financial information that is significantly different from previous periods. Another form in which the auditors use financial indices is comparing the company’s information with external sources. This use of analytical procedures ensures that the company is not significantly different from others in the same industry. The important differences in the financial indices of a company can indicate that they are applying accounting procedures that are inappropriate to financial information.
Another use of the analytical procedures is to solicit information from a customer’s customers to compare it with the company’s internal registers. This part of the menu process focuses on bills to pay, bills to pay or banking information. The auditors send an official card soliciting that the client discloses the balances relating to these accounts, and then the auditors compare this information with the same month in the client’s accounting book. If there are differences between the two figures, the auditors must delve into the main book and discover the reason for the differences.
There are other types of analytical procedures for auditors to use with the documentation of their clients. The auditors will use the procedures they consider necessary to create an audition. The design and the plan for these procedures generally come from the auditorium plan. This plan dictates the size of the screen necessary to evaluate the information and the procedures that best identify the problems in the financial paper.
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