SA 520 Summary Analytical Review Procedures

SA 520 Summary  Analytical Review Procedures

1. Purpose: SA 500 recommends various methods of collection of evidence and among them analytical review procedures is one of them. Analytical procedures include comparison of financial information with prior period information, anticipated results such as budgets, and similar industry information.

2. Applied to:

 a. Consolidated financial statements.

 b. Financial statements of components (i.e. Factories, Branch etc.)

 c. Individual elements of financial information.

3. Stages of application of Analytical Review Procedures.

 a. in planning the audit procedures.

 b. As a substantive test.

 c. As an overall review at the end of the audit.

4. Factor's to be considered while applying analytical procedures as substantive test:

Extent of reliance, Nature of the business (For e.g. Seasonal business), Segregation,

Financial and non financial information (like number of units sold), Sources from which information is available i.e. internal/external sources, Comparability of the information available, Knowledge gained by auditor in the previous year’s audit.

5. The extent of reliance on analytical procedures depends on several factors: Materiality of the items, Results of other audit procedures ,Assessment of inherent and control risks, Controls over preparation of financial information

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