[Planning Level] Analytical Procedures → Understand

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Non-Financial Data is Also Used.

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Although analytical procedures used in planning the audit often use only financial data, sometimes relevant nonfinancial information is considered as well.

 

For example, number of employees, square footage of selling space, volume of goods produced, and similar information may contribute to accomplishing the purpose of the procedures.

 

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Analytical Procedures of Risk Assessing

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The purpose of those procedures is to determine whether the statements are consistent with the auditor’s understanding of the entity (AU-C 520).

 

 

An audit plan based on the audit strategy must be developed and documented for all audit engagements.

 

It includes the nature, timing, and extent of procedures expected to reduce audit risk to an acceptably low level.

 

Thus, the audit plan includes a description of risk assessment procedures.

 

Risk assessment procedures are performed to obtain an understanding of the entity and its environment, including its internal control, to identify and assess the risks of material misstatement (RMMs) at the levels of (1) the financial statements as a whole and (2) relevant assertions.

 

Risk assessment procedures include (1) inquiries of management and others within the entity, (2) analytical procedures, and (3) observation and inspection.

 

The auditor also may perform other appropriate procedures, such as inquiring of external parties (e.g., legal counsel) or reviewing externally generated information (e.g., financial publications).

 

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Analytical Procedure 예시

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Comparing Current-year Balances to Budgeted Balances.