Ratio analysis in audit
Ratio analysis compares related financial figures to help identify relationships, trends and potential audit risks. The auditor considers definitions, data reliability, comparability and further evidence; the same label can have different calculation conventions.
Worked example
The auditor calculates receivables days using the selected convention and investigates an unexpected increase.
Common mistake
An unusual ratio is a signal for investigation, not proof of misstatement or sufficient substantive evidence by itself.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Supporting | September 2026–June 2027 |