ASRE 2410 - Review of an Interim Financial Report Performed by the Independent Auditor of the Entity - April 2006
APPENDIX 2APPENDIX 2
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APPENDIX 2
ANALYTICAL PROCEDURES THE AUDITOR MAY CONSIDER WHEN PERFORMING A REVIEW OF AN INTERIM FINANCIAL REPORT
The analytical procedures carried out in a review of an interim 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 an interim financial report include the following:
- Comparing the interim financial report with the interim financial report of the immediately preceding interim period, with the interim financial report of the corresponding interim period of the preceding financial year, with the interim financial report that was expected by management for the current period, and with the most recent audited annual financial report.
- Comparing the current interim financial report with anticipated results, such as budgets or forecasts. For example, comparing tax balances and the relationship between the provision for income taxes to pre-tax income in the current interim financial report with corresponding information in:
♦ budgets, using expected rates; and
♦ financial information for prior periods.
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Comparing the current interim financial report with relevant non-financial information.
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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.
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Comparing ratios and indicators for the current interim period with those of entities in the same industry.
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Comparing relationships among elements in the current interim financial report with corresponding relationships in the interim 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.
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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;