ISA 520 – Analytical Procedures

3 Analytical procedures at final review stage

At the end of audit, auditor shall apply analytical procedures to form an overall conclusion that financial statements are consistent with the auditor’s expectation.

These analytical procedures at the end of audit engagement provide corroborative evidence or in simple words confirms the evidence that auditor obtained during audit engagement.

The results of analytical procedures applied at the end of audit may help in identifying previously unrecognized risk. If any new identification is made, auditor may need to reassess the risk of material misstatement that may follow modification in the planned further audit procedures i.e. test of control and/or substantive procedures.

4 Investigating results of analytical procedures

If any inconsistency in relationship or fluctuation is found then auditor investigates by:

• Inquiring management for the reasons of such inconsistencies and obtaining additional evidence to corroborate management responses
• If necessary, perform additional audit procedures

The need to perform additional audit procedures depends on:

• the degree to which management’s responses are consistent with auditor’s understanding of entity and other evidence already obtained by the auditor; and
• Whether auditor is satisfied with management’s responses