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When Using Analytical Procedures, the Auditor First Needs to Develop

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Essay

When using analytical procedures, the auditor first needs to develop an expectation with which to compare recorded results. What is meant by "precision of the expectation," and what factors affect the precision of analytical procedures?


Definitions:

Enter Industry

The act of starting or initiating business operations in a particular market sector.

Long Run

The long run is a time period sufficiently long that all factors of production and costs can be fully adjusted, including plant sizes, machinery, and entry or exit from an industry.

Monopolistically Competitive

A market structure where many firms sell similar but not identical products, allowing them some power to influence prices.

Efficient Use of Resources

An economic condition where resources are allocated in the most effective manner possible to meet the needs and desires of consumers.

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