Analytical Procedures

• Analytical procedures are important

• But remember that analytical procedures are used

during three main phases of the audit:
1.Planning

2.As part of substantive testing

3.As part of completing the audit engagement

Accounts Receivable 1
Using Analytical Review to Target Detailed Tests

• Helpful analyses could include comparing:

• Sales by month
• Sales returns and allowances
• Individual customer balances
• Bad debt expense to gross sales
• Number of days in A/R
• Aging categories
• Allowance for uncollectible accounts

• To what would these items be compared?

• What is the auditor looking for? Accounts Receivable 2

 The Audit Objective and the Audit Procedure

• Existence and accuracy:

• Confirm accounts receivable balances

• performing alternative procedures for discrepancies and non-replies.

Accounts Receivable 3