Auditors Perform Analytical Procedures Of The Audit Program Essay

842 Words Nov 23rd, 2014 4 Pages
Auditors perform analytical procedures in the planning phase of the audit program to identify significant or unusual items for further review and testing. Marilyn Terrill, the senior auditor for the Uden Company audit would perform analytical procedures of financial statement information to study the relationships of the financial data. For instance, performing horizontal analysis helps identify trends in previous reporting periods. Using this knowledge of Uden Company and of Industry trends/averages, Marilyn can develop expectations of Uden Company financial performance in the current period to compare with the actual reported performance in Uden’s unaudited financial statements. Marilyn will determine amounts of differences considered acceptable for the audit. Differences that exceed the acceptable level should be further investigated (Whittington & Pany, 2014).
During the planning phase, the purpose of analytical procedures is to assist in risk assessment. A risk assessment means identifying account balances, and transactions with a high risk of material misstatement, whether due to fraud or error. Analytical procedures performed as a part of risk assessment may bring to light issues surrounding the client, that the auditor was not aware. The auditor will design their responses to the assessed risks, such as adjusting the nature, timing and extent of further audit procedures in her efforts to detect any misstatements (AICPA, 2012).
In the planning stage of the Uden…

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