Analytical Procedures Consist of Evaluating Financial Information by Studying Financial

question 12

Essay

Analytical procedures consist of evaluating financial information by studying financial and nonfinancial 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 and 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.

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Definitions:

Permissible Variation

The acceptable range of deviation that a quality characteristic can exhibit without affecting the performance of a product or system.

Nominal Specification

Nominal Specification refers to the precisely defined or stated values of variables or parameters that are intended in design or development, serving as standards or norms.

Variables Data

Data that can be measured and quantified, coming in a range of values that can often be fractioned or divided further.

R-chart

A control chart used to monitor the range of variability within a process as a measure of dispersion.