Analytical Procedures Essay

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Analytical Procedures
Karissa Johnson
ACC410 Auditing
Instructor: Catherine McBride
July 14, 2014

The reasonable methods performed at the planning phase of the audit are meant to assist auditors identify uncommon dealings, activities, or sums and calculations which might affect the fairness of the fiscal reports. These types of logical methods are also useful for the auditors to enhance their understanding of their client’s business. “Analytical procedures used in planning the audit generally use data aggregated at a high level. Furthermore, the sophistication, extent and timing of the procedures, which are based on the auditor's judgment, may vary widely depending on the size and complexity of the client. For some entities, the procedures may consist of reviewing changes in account balances from the prior to the current year using the general ledger or the auditor's preliminary or unadjusted working trial balance. In contrast, for other entities, the procedures might involve an extensive analysis of quarterly financial statements. In both cases, the analytical procedures, combined with the auditor's knowledge of the business, serve as a basis for additional inquiries and effective planning” (PAOB, 2014).

These consented solutions relied on the pattern of the inclinations, giving the thought to the nature of the account.

UDEN SUPPLY COMPANY
Comparative Income Statement
Years Ended December 20X1, 20X2, and 20X3
(Thousands)

20X1 Audited
20X2 Audited
20X3 Audited
20X4 Expected
Sales
8,700
9,400
10,100 10,800 (10,100 + 700)
Cost of goods sold
6,000
6,500
7,000
(7,468) (10,800 x .6915) Gross profit
2,700
2,900
3,100
3,332

Sales Commissions
610
660
710
756 (10,800 x .07)
Advertising
175
190
202 216 (10,800 x .02)
Salaries
1,061
1,082
1,103 1,124 (1,103 + 21)
Payroll taxes
184
192
199
207 (199 + 8)
Employee benefits
167
174
181
188 (181 + 7)
Rent
60
61
62 63 (62 + 1)
Depreciation
60
63
66 69 (66 + 3)
Supplies
26
28
30 32 (30 + 2)
Utilities
21
22
23 24 (23 + 1)
Legal and accounting
34
37
40
43 (40 + 3)
Miscellaneous
12
13
14 15 (14 + 1)
Interest expense
210
228
240
252 (240 + 12)
Total
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