What are the five major types of analytical procedures in auditing?

Evaluate differences.

How do you identify analytical procedures?

Performing analytical procedures generally follows this four-step process:

1. Form an expectation. Here, the auditor develops an expectation of an account balance or financial relationship.
2. Identify differences between expected and reported amounts.
3. Investigate the reason.
4. Evaluate differences.

How do you test for reasonableness?

The reasonableness standard is a test which asks whether the decisions made were legitimate and designed to remedy a certain issue under the circumstances at the time. In law, the reasonableness test is performed by assessing a legal dispute or issue through the eyes of a “reasonable person”.

What is the difference between auditing and monitoring?

Auditing represents evaluation activities completed by individuals independent of the process on a periodic basis and monitoring represents evaluation activities completed by individuals who may not independent of the process on a routine or continuous basis.

What are the three types of substantive tests?

The three types of substantive tests are analytical procedures, a test of details of transactions, and tests of details of balances.

What are the two types of substantive procedures?

SUBSTANTIVE TESTS are those activities performed by the auditor to detect material misstatement or fraud related to transactions or account balances. There are two categories of substantive tests – analytical procedures and tests of detail.

What is the difference between analytical procedures and test of details?

Test of details test ending balances in accounts and test transactions when there are few that cause an account to change from one year to the next. Analytical procedures look at relationships between financial and nonfinancial information to test for reasonableness often using selected ratios.

Which of the following is the test of reasonableness?

The reasonableness standard is a test that asks whether the decisions made were legitimate and designed to remedy a certain issue under the circumstances at the time. Courts using this standard look at both the ultimate decision, and the process by which a party went about making that decision.

What is reasonableness check and example?

A reasonableness test is an auditing procedure that examines the validity of accounting information. For example, an auditor could compare a reported ending inventory balance to the amount of storage space in a company’s warehouse, to see if the reported amount of inventory could fit in there.

What are the steps of auditing?

Audit Process

1. Step 1: Planning. The auditor will review prior audits in your area and professional literature.
2. Step 2: Notification.
3. Step 3: Opening Meeting.
4. Step 4: Fieldwork.
5. Step 5: Report Drafting.
6. Step 6: Management Response.
7. Step 7: Closing Meeting.
8. Step 8: Final Audit Report Distribution.

What are the basic concepts of auditing?

The basic principles of auditing are confidentiality, integrity, objectivity, and independence, skills and competence, work performed by others, documentation, planning, audit evidence, accounting system and internal control, and audit reporting.