Analytical Procedures: Planning vs Final Review
The same tool can serve two different purposes: planning helps identify risk; final review asks whether the statements make sense as a whole.
Planning stage
Analytical procedures during planning help the auditor understand the entity and identify unusual relationships, trends, or areas of possible material misstatement.
Final review
Near completion, analytical procedures help the auditor evaluate whether the financial statements are consistent with the auditor's understanding of the entity and the evidence obtained.
Not the same as substantive analytics
Substantive analytical procedures are evidence-gathering procedures designed with an expectation precise enough to detect material misstatement. Their purpose is different from the required planning and overall-review uses.
Exam strategy
Look at timing and objective. Early means risk identification; late means overall reasonableness; substantive means direct audit evidence.
The takeaway
Planning analytics identify where risk may exist; final-review analytics ask whether the completed statements fit the auditor's overall understanding.
Related Summit resources
FAQ
Are analytical procedures used in planning?
Yes.
Are they also used near the end of the audit?
Yes.
Are planning analytics automatically substantive evidence?
No.