Determine the factors of auditors, Financial Management

Determine the factors of auditors

When anticipating to apply analytical review as a substantive procedure, auditors determine a number of factors like:

Factor

Impact on use

Plausibility/predictability of relationships

If relationship is strong (for example commission on sales) analytical procedure may suffice.

Degree of disaggregation of available

information

Procedures are more effective when applied to components.

Availability of financial and non-financial

data

Independently prepared non-financial data will allow more effective procedures.

Relevance of information

Budgets which are based on expectation are more useful than targets.

Comparability of information

Broad industry data (for example RPI) mayn't be relevant to specialised industry.

Knowledge gained previously

Effective procedures are based on recognising unexpected/unusual variations.

If knowledge is limited, it's difficult to know what to expect.

Reliability of various forms of data

If data used is unreliable, then any results are equally unreliable hence procedures less effective.

Nature of enterprise and its operations

Some businesses lend themselves to analytical procedures as steady trends develop therefore easier to know what to expect and spot variations.

 

Posted Date: 9/3/2013 5:05:24 AM | Location : United States







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