Auditing & Assurance › Analytical Procedures
How does the reliability of the data used affect substantive analytical procedures?
AdvancedAnswer
If the data underlying the expectation or the recorded amount is unreliable (e.g., from weak controls or the same source being tested), the analytic gives weak or misleading evidence. Auditors test or corroborate the reliability of key data (often via controls testing or agreeing to independent sources) before relying on analytics for substantive assurance.
Real-world example Before relying on budget-vs-actual analytics, the auditor confirms budgets were rigorously prepared and not simply set to match actuals.