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Hi Gromit,
Analytical procedure can be used in the followings:
– Ratio analysis
– Trend analysis
– Proof in total
What is proof in total? with example? Many thanks.For example:
Wages this year should be approximately:
Wages last year x (1 + inflation rate) x Employees this year/Employees last year
Or:
Value of ticket sales in a cinema should be approximately (or exactly!) number of visitors x admission charge.
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Does it mean that it is basically to confirm the calculation whether it is correct?
Analytical procedures are carried out by the auditor to make a judgement about amounts in the FS. If AP results are consistent with what is expected, the auditor has some reassurance; if they are very different the auditor will have more doubts about the accuracy of the figures.
Companies sales ledger has been corrupted and the auditor cannot obtain evidence. Is this adjusting or non adjusting event?
Neither – it simply means that the audit opinion will have to be modified because of lack of evidence. I does not really matter whether the corruption was before or after year end: the auditor is likely to have no (or insufficient) evidence about receivables.
Good day, Would you be so kind as to advice how can I as an auditor perform proof in total for a loan interest? Thank you
Eg: average balance outstanding per month x average interest rate during the year.
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