All 18 Analytical Procedures questions
More in Analytical Procedures
What is a substantive analytical procedure and when is it appropriate? How do you develop an expectation for analytical procedures? How do you investigate significant fluctuations found by analytical procedures? Why is disaggregation important in analytical procedures? What is the required analytical review at the final/completion stage? When are analytical procedures more effective than tests of details, and vice versa? What is the difference between the precision and reliability of an analytical procedure? How are data analytics changing analytical procedures? How do you use regression or predictive models in substantive analytics? How does the reliability of the data used affect substantive analytical procedures?
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What are the limitations of analytical procedures?

Intermediate

Answer

Analytics rely on plausible, stable relationships and reliable data; if relationships are volatile, data is unreliable, or expectations imprecise, they may miss misstatements or give false comfort. They may not detect deliberate, consistent manipulation that preserves expected ratios. Hence analytics usually supplement, not replace, tests of details for high-risk areas.
Real-world example A fraud that scales costs and revenue proportionally keeps margins normal, so analytics alone wouldn't flag it.

Common follow-ups: When can analytics give false comfort? | Why supplement analytics with details?

Audit Evidence & Procedures Fraud & Error Responsibilities Analytical Procedures
All 18 Analytical Procedures questions