All 18 Analytical Procedures questions
More in Analytical Procedures
At what stages of the audit are analytical procedures used? What is ratio analysis in auditing? What comparisons are commonly used in analytical procedures? What is trend analysis? What is the difference between analytical procedures and tests of details in simple terms? 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 are the limitations of analytical procedures?
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How do analytical procedures help in risk assessment (planning)?

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Answer

In planning, analytics compare the draft or prior figures and ratios to expectations to spot unusual items, trends, and relationships, helping the auditor understand the business and identify areas of higher risk of material misstatement to focus procedures on. They are a required part of risk assessment under ISA 315.
Real-world example Planning analytics reveal an unexpected inventory build-up, directing extra attention to obsolescence and valuation.

Common follow-ups: Why are planning analytics required? | How do they shape the audit plan?

Audit Risk & Materiality ISA Standards Analytical Procedures
All 18 Analytical Procedures questions