8.3: Burlingham Bees

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8.3: Burlingham Bees Using Analytical Procedures as Substantive Tests Using Analytical Procedures as Substantive Tests 1. The requirements related to developing an expectation and conducting analytical procedures when those procedures are intended to provide substantive evidence is provided by the reorganized Audit Standard 2305 Substantive Analytical Procedures effective December 31, 2016 in the following list: a. “Analytical procedures are an important part of the audit process and consist of evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data. Analytical procedures range from simple comparisons to the use of complex models involving many…show more content…
Financial information for comparable prior period(s) giving consideration to known changes ii. Anticipated results—for example, budgets, or forecasts including extrapolations from interim or annual data iii. Relationships among elements of financial information within the period iv. Information regarding the industry in which the client operates—for example, gross margin information v. Relationships of financial information with relevant nonfinancial information d. “The auditor's reliance on substantive tests to achieve an audit objective related to a particular assertion may be derived from tests of details, from analytical procedures, or from a combination of both. The decision about which procedure or procedures to use to achieve a particular audit objective is based on the auditor's judgment on the expected effectiveness and efficiency of the available procedures. For significant risks of material misstatement, it is unlikely that audit evidence obtained from substantive analytical procedures alone will be sufficient (PCAOB, AS 2305.09).” e. “The auditor considers the level of assurance, if any, he wants from substantive testing for a particular audit objective and decides, among other things, which procedure, or combination of procedures, can provide that level of assurance. For some assertions, analytical

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