ANALYTICAL PROCEDURES THE AUDITOR MAY COANALYTICAL PROCEDURES THE AUDITOR MAY CONSIDER WHEN PERFORMING A REVIEW OF A FINANCIAL REPORT

ANALYTICAL PROCEDURES THE AUDITOR MAY CONSIDER WHEN PERFORMING A REVIEW OF A FINANCIAL REPORT

The analytical procedures carried out in a review of a financial report are determined by the auditor’s judgement. The procedures listed below are for illustrative purposes only. It is not intended that all the procedures suggested apply to every review engagement. This Appendix is not intended to serve as a program or checklist in the conduct of a review.

Examples of analytical procedures the auditor may consider when performing a review of a financial report include the following:

 Comparing the financial report with the financial report of the immediately preceding period, with the financial report of the corresponding period of the preceding financial year, with the financial report that was expected by management for the current period, and with the most recent audited annual financial report.

 Comparing the current financial report with anticipated results, such as budgets or forecasts. For example, comparing sources of revenue and the and the cost of sales in the current financial report with corresponding information in:

 budgets, including expected gross margin(s); and

 financial information for prior periods.

 Comparing the current financial report with relevant non‑financial information.

 Comparing the recorded amounts, or ratios developed from recorded amounts, to expectations developed by the auditor. The auditor develops such expectations by identifying and applying relationships that reasonably are expected to exist based on the auditor’s understanding of the entity and of the industry in which the entity operates.

 Comparing ratios and indicators for the current period with those of entities in the same industry.

 Comparing relationships among elements in the current financial report with corresponding relationships in the financial report of prior periods, for example, expense by type as a percentage of sales, assets by type as a percentage of total assets, and percentage of change in sales to percentage of change in receivables.

 Comparing disaggregated data. The following are examples of how data may be disaggregated:

 by period, for example, revenue or expense items disaggregated into quarterly, monthly, or weekly amounts;

 by product line or source of revenue;

 by location, for example by component;

 by attributes of the transaction, for example, revenue generated by designers, architects, or craftsmen; and

 by several attributes of the transaction, for example, sales by product and month.