Analytical Procedures Consist of Evaluating Financial Information by Studying Financial

question 3

Essay

Analytical procedures consist of evaluating financial information by studying financial
and non -financial data and looking for plausible or implausible relationships.The procedures can range from making simple comparisons to using complex models involving many relationships and elements of data.They can involve time-series comparisons of recorded amounts, ratios developed from recorded amounts and they always include comparison to expectations developed by the auditors.
Required:
A) Describe the broad purposes of analytical procedures.
B) Identify the sources of information from which an auditor develops expectations.

• A) Describe the broad purposes of analytical procedures.
• B) Identify the sources of information from which an auditor develops expectations.

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Definitions:

Direct Approach

A communication style that is straightforward and to the point, without circumvention or ambiguity.

Negative Message

Communication that conveys unpleasant, disappointing, or adverse information to the recipient.

Positive Statement

A factual assertion that can be tested or verified, often contrasted with normative (opinion-based) statements.

Indirect Approach

A communication strategy where the main points are not stated directly at the beginning but are introduced gradually.