Analytical procedures (finance auditing)

Analytical procedures are one of many financial audit processes which help an auditor understand the client's business and changes in the business, and to identify potential risk areas to plan other audit procedures.

Analytical procedures include comparison of financial information (data in financial statement) with

  1. prior periods
  2. budgets
  3. forecasts
  4. similar industries and so on.

It also includes consideration of predictable relationships, such as:

  1. gross profit to sales,
  2. payroll costs to employees,
  3. financial information and non-financial information, for examples the CEO's reports and the industry news.

possible sources of information about the client include:

  1. interim financial information
  2. Budgets
  3. Management accounts
  4. Non-Financial information
  5. Bank and cash records
  6. VAT returns
  7. Board minutes
  8. Discussion or correspondence with the client at they year-end

See also