ASA 520 - Analytical Procedures - April 2006
Analytical Procedures as Risk AssessmentAnalytical Procedures as Risk Assessment Procedures
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Analytical Procedures as Risk Assessment Procedures
12 The auditor shall apply analytical procedures as risk assessment procedures to obtain an understanding of the entity and its environment.
13 Application of analytical procedures may indicate aspects of the entity of which the auditor was unaware, and will assist in assessing the risks of material misstatement in order to determine the nature, timing and extent of further audit procedures.
14 Analytical procedures applied as risk assessment procedures use both financial and non-financial information, for example, the relationship between sales and square metres of selling space or volume of goods sold. ASA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, contains additional explanatory guidance on applying analytical procedures as risk assessment procedures.