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Dear sir,
Analytical procedures are confusing me.Is there an easy way to approach them?Is there a default set of calculations that I can do all the time.How do I know what to calculate?As summarised on page 71, analytical procedures
… must be used in risk assessment (see also page 52)
… may be used (i.e. optional) as substantive procedures
… must be used in final review.Ratio analysis is just one type of analytical procedure and, as in financial statement analysis (F3/FA – F7/FR and P2/SBR) there is no single set of calculations to be made in all circumstances. When presented with financial statements (extracts) in Q1, for example, you should calculate a suitably considered range of ratios – profitability, liquidity, performance, gearing (possibly). The number of marks available for calculations alone will be capped (e.g. at 5 marks in S18 according to the examiner’s report – please READ that report for the common issues that the examiner reported).
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