28 nov. 2017 ISA 520. CNCC-CSOEC-IRE 2017. 2/10. Source originale : Handbook of International Standards on Auditing and Quality Control ...
ISA 520. 433. AU. DITING. INTERNATIONAL STANDARD ON AUDITING 520. ANALYTICAL PROCEDURES. (Effective for audits of financial statements for periods.
This International Standard on Auditing (ISA) 520 ?Analytical Procedures?
ISA 520 ANALYTICAL PROCEDURES. Proposed redrafted International Standard on Auditing issued for comment by the International Auditing and Assurance
ISA 520. 457. AU. DITING. INTERNATIONAL STANDARD ON AUDITING 520. ANALYTICAL PROCEDURES. (Effective for audits of financial statements for periods.
International Standard on Auditing (UK) (ISA (UK)) 520 Analytical Procedures
https://www.icaew.com/-/media/corporate/files/technical/audit-and-assurance/isas/isa-520-analytical-procedures.ashx
International Standard on Auditing (Ireland) (ISA (Ireland)) 520 This ISA (Ireland) is effective for the audits of financial statements for periods.
Norme ISA 520. PROCEDURES ANALYTIQUES. La présente Norme internationale d'audit (ISA) publiée en anglais par l'International.
12 juin 2008 This belief is supported by ISA 330 paragraph 20
International Standard on Auditing (ISA) 520 Analytical Procedures should be read in conjunction with ISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing
International Standard on Auditing (ISA) 520 “Analytical Procedures” should be read in conjunction with ISA 200 “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing ” Introduction Scope of this ISA 1
International Standard on Auditing (UK and Ireland) (ISA (UK and Ireland)) 520 “Analytical Procedures” should be read in conjunction with ISA (UK and Ireland) 200 “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (UK and Ireland) ” 1
International Standard on Auditing (ISA) 520 Analytical Procedures should be read in conjunction with ISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing Introduction Scope of this ISA
AU-C Section 520 Analytical Procedures Source: SAS No 122 Effective for audits of financial statements for periods ending on orafter December 15 2012 Introduction Scope of This Section 01This section addresses the auditor's use of analytical procedures assubstantive procedures (substantive analytical procedures)
Auditing Standard ASA 520 Analytical Procedures (as Amended) This compilation takes into account amendments made up to and including 5 December 2018 and was prepared on 4 January 2019 by the Auditing and Assurance Standards Board (AUASB) This compilation is not a separate Auditing Standard made by the AUASB
Paragraph 1 of ED-ISA 520 stated: This International Standard on Auditing (ISA) deals with the auditor’s use of analytical procedures as substantive procedures in response to assessed risks and as procedures that assist in arriving at the auditor’s overall conclusion in an audit of financial statements
Standard on Auditing ISA 520 (Redrafted) Analytical Procedures (proposed ISA 520) issued for comment by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants We recognise that without revision it is a difficult task to redraft proposed
Standard on Auditing (S A) 520 “Analytical Procedures” should be read in the context of the “Preface to the Standards on Quality Control Auditing Review Other Assurance and Related Services1” which sets out the authority of SAs and SA 200 “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards
International Standard on Auditing (Ireland) (ISA (Ireland)) 520 Analytical Procedures should be read in conjunction with ISA (Ireland) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (Ireland)
International Standard on Auditing (ISA) 500 Audit Evidence should be read in conjunction with ISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing ? Conforming amendments have been made to this ISA as a result of ISA 610 (Revised) Using the Work
1(a)ISA 520 Analytical Proceduresrequires that the auditor performs analytical procedures during the initial risk assessment stage of the audit These procedures also known as preliminary analytical review are usually performed before the year end as part of the planning of the final audit Required:
What is Isa 520 and why is it important?
- The definition becomes particularly important because proposed ISA 520 has introduced requirements for analytical procedures as substantive procedures in response to assessed risks. The definition can be read in two ways.
Does SA 520 contain modifications?
- Modificationsvis-a-visISA 520, “Analytical Procedures” SA 520, “Analytical Procedures” does not contain any modificationsvis-à-visISA 520. 12SA315, paragraph 31. Handbook of Auditing Pronouncements-I.A SA 520 10 Appendix Analytical Procedures Trends
What are the requirements for 1(a)Isa 520 analytical procedures?
- The Association of Chartered Certified Accountants Section A – BOTH questions are compulsory and MUST be attempted 1(a)ISA 520 Analytical Proceduresrequires that the auditor performs analytical procedures during the initial risk assessment stage of the audit.
What is analytical procedures 5 SA 520?
- Analytical Procedures 5 SA 520 decision about which audit procedures to perform, including whether to use substantive analytical procedures, is based on the auditor’s judgment about the expected effectiveness and efficiency of the available audit procedures to reduce audit risk at the assertion level to an acceptably low level. A5.
SA 520*
ANALYTICALPROCEDURES
(Effective for all audits relating to accounting periods beginning on or after April 1, 2010)
Contents
Paragraph(s)
Introduction
Scope of this SA........................................................................................1
Effective Date...........................................................................................2
Requirements
Substantive Analytical Procedures..........................................................5 Analytical Procedures that Assist When Forming an Overall Investigating Results of Analytical Procedures........................................7
Applicationand Other Explanatory Material
Nature of Analytical Procedures......................................................A1-A3 Substantive Analytical Procedures................................................A4-A16 Analytical Procedures that Assist When Forming an Overall Investigating Results of Analytical Procedures............................A20-A21 Modificationsvis-a-visISA 520, "Analytical Procedures"
Appendix
context ofthe"Preface to the Standards on Quality Control, Auditing, Review, Other Assurance and Related Services1",which sets out the authority of SAsand SA200,"OverallObjectivesofthe IndependentAuditorandtheConductofan
AuditinAccordancewithStandardson Auditing"2.
*Published in March, 2010 issue of the Journal.
1Published in July, 2007 issue of the Journal.2Published in March, 2010 issue of the Journal.
Introduction
Scope of this SA
analytical proceduresassubstantiveprocedures("substantiveanalytical procedures"),andas proceduresneartheendoftheauditthatassisttheauditor whenforminganoverall conclusiononthefinancialstatements.Theuseof analyticalproceduresasrisk assessmentproceduresisdealtwithinSA3153.SA ofaudit proceduresinresponsetoassessedrisks;theseauditproceduresmay includesubstantive analytical procedures4.
EffectiveDate
beginningonorafterApril 1, 2010.
Objectives
3.The objectives of the auditor are:
analytical procedures;and assistthe auditorwhenforminganoverallconclusionastowhetherthe financialstatements are consistent with theauditor"s understandingofthe entity.
Definition
evaluationsof financialinformationthroughanalysisofplausiblerelationships amongbothfinancial andnon-financialdata.Analyticalproceduresalso encompasssuchinvestigationasis necessaryofidentifiedfluctuationsor fromexpectedvaluesbyasignificantamount.The auditor"s choice of procedures, methods and level of application is a matter of professional judgement.(Ref: Para. A1-A3) Understanding the Entity and Its Environment",paragraphs6(b)andA7-A10.
4SA330, "TheAuditor"s Reponses toAssessed Risks",paragraphs6and18.
Requirements
SubstantiveAnalyticalProcedures
aloneorin combinationwithtestsofdetails,assubstantiveproceduresin accordancewithSA3305,the auditorshall:(Ref: Para. A4-A5) misstatementandtestsof details, if any, for these assertions;(Ref: Para.
A6-A11)
recorded amountsorratiosisdeveloped,takingaccountofsource, comparability,andnature andrelevanceofinformationavailable,and controlsoverpreparation;(Ref: Para. A12-A14) whetherthe expectationissufficientlyprecisetoidentifyamisstatement that,individuallyor whenaggregatedwithothermisstatements,maycause thefinancialstatementstobemateriallymisstated; and(Ref: Para. A15) expectedvalues thatisacceptablewithoutfurtherinvestigationasrequired byparagraph7.(Ref: Para. A16) AnalyticalProceduresthatAssistWhen Forming an Overall
Conclusion
oftheauditthat assisttheauditorwhenforminganoverallconclusionasto whetherthefinancial statements are consistentwith the auditor"s understanding of the entity.(Ref: Para. A17-A19)
Investigating Results ofAnalytical Procedures
fluctuationsor relationshipsthatareinconsistentwithotherrelevantinformation orthatdifferfrom expected values by a significant amount, the auditor shall investigatesuch differences by:
5SA330,paragraph18.
relevanttomanagement"s responses; and
Para. A20-A21)
Application and Other Explanatory Material
Nature ofAnalytical Procedures(Ref:Para.4)
entity"sfinancial information with, for example:
Comparable information for prior periods.
expectationsofthe auditor, such as an estimation of depreciation. comparablesizein the same industry. A2.Analyticalprocedures also include consideration of relationships, for example: toa predictablepatternbasedontheentity"sexperience,suchasgross margin percentages. as payroll costs to number ofemployees. methodsrange fromperformingsimplecomparisonstoperformingcomplex analysesusingadvanced statisticaltechniques.Analyticalproceduresmaybe appliedtoconsolidatedfinancial statements, components and individual elements of information.
SubstantiveAnalyticalProcedures(Ref: Para.5)
ofdetails, substantiveanalyticalprocedures,oracombinationofboth.The decisionaboutwhich auditprocedurestoperform,includingwhethertouse auditriskattheassertionleveltoanacceptablylow level. reliabilityof informationneededtoapplysubstantiveanalyticalprocedures, and theresultsofany such analyticalproceduresperformedbytheentity.Itmaybe effectivetouseanalyticaldata preparedbymanagement,providedtheauditoris satisfiedthatsuchdataisproperly prepared. Suitability of ParticularAnalyticalProcedures for GivenAssertions(Ref:
Para.5(a))
plannedanalytical proceduresisbasedontheexpectationthatrelationships amongdataexistandcontinuein theabsenceofknownconditionstothe contrary.However,thesuitabilityofaparticular analyticalprocedurewilldepend may cause the financialstatements to bemateriallymisstated. effectiveasananalytical procedure.Forexample,whereanentityhasaknown numberofemployeesatfixedratesof pay throughout the period, itmay be possible for the auditor to use this data to estimate thetotalpayrollcostsforthe periodwithahighdegreeofaccuracy,therebyproviding auditevidencefora significantiteminthefinancialstatementsandreducingtheneedto performtests ofdetailsonthepayroll.Theuseofwidelyrecognisedtraderatios(suchas profit reasonablenessofrecordedamounts. assurance.Analytical proceduresinvolving,forexample,thepredictionoftotal rentalincomeonabuilding dividedintoapartments,takingtherentalrates,the numberofapartmentsandvacancy ratesintoconsideration,canprovide persuasiveevidenceandmayeliminatetheneedfor furtherverificationby meansoftestsofdetails,providedtheelementsareappropriately verified.In provideuseful corroboration if used in combination with other audit procedures. proceduresis influencedbythenatureoftheassertionandtheauditor"s salesorderprocessingareweak,the auditormayplacemorerelianceontestsof detailsratherthanonsubstantiveanalytical procedures for assertionsrelated to receivables. A10.Particularsubstantiveanalytical proceduresmayalsobeconsidered suitablewhentestsof detailsareperformedonthesameassertion.Forexample, whenobtainingauditevidence regardingthevaluationassertionforaccounts receivablebalances,theauditormayapply analyticalprocedurestoanagingof customers"accountsinadditiontoperformingtestsofdetails onsubsequent cash receipts to determine the collectability ofthe receivables.
Considerations Specific to Public Sector Entities
traditionallyconsideredin theauditofbusinessentitiesmaynotalwaysbe relevantintheauditofgovernmentsor othernon-businesspublicsectorentities; betweenrevenueandexpenditure.Inaddition,because expenditureonthe acquisitionofassetsmaynotbecapitalised,theremaybeno relationship or statisticsforcomparativepurposesmaynotbeavailableinthepublicsector. However, otherrelationshipsmayberelevant,forexample,variationsinthecost perkilometerof road construction or the number of vehicles acquired compared with vehicles retired.
The Reliabilityof the Data(Ref:Para.5(b))
dependentonthe circumstancesunderwhichitisobtained.Accordingly,the followingarerelevantwhen determiningwhetherdataisreliableforpurposesof designingsubstantiveanalytical procedures: reliable when it isobtainedfromindependent sources outside theentity6; thatproducesand sellsspecialisedproducts;
6SA500,"AuditEvidence",paragraphA31.
budgets havebeenestablishedasresultstobeexpectedratherthanas goalstobeachieved; and ensureits completeness,accuracyandvalidity.Forexample,controlsover thepreparation, review andmaintenance of budgets. any,overthe entity"spreparationofinformationusedbytheauditorinperforming substantive analyticalproceduresinresponsetoassessedrisks.Whensuch controlsareeffective,the auditorgenerallyhasgreaterconfidenceinthe reliabilityoftheinformationand, therefore,intheresultsofanalyticalprocedures. Theoperatingeffectivenessofcontrols overnon-financialinformationmayoften betestedinconjunctionwithothertestsof controls.Forexample,inestablishing controlsovertheprocessingofsalesinvoices,an entitymayincludecontrols overtherecordingofunitsales.Inthesecircumstances,the auditormaytestthe operatingeffectivenessofcontrolsovertherecordingofunitsalesin conjunction withtestsoftheoperatingeffectivenessofcontrolsovertheprocessingof sales tobe used for substantive analytical procedures7. irrespectiveofwhether theauditorperformssubstantiveanalyticalprocedureson theentity"speriodendfinancial statements,orataninterimdateandplansto performsubstantiveanalyticalprocedures fortheremainingperiod.SA330 establishesrequirementsandprovides guidanceonsubstantiveprocedures performedatan interimdate8. Evaluation ofWhether the Expectation Is SufficientlyPrecise(Ref:Para. 5(c)) canbedeveloped sufficientlypreciselytoidentifyamisstatementthat,when aggregatedwithothermisstatements,may cause the financial statements to be
7SA500,paragraph10.
8SA330,paragraphs22-23.
materiallymisstated, include: procedures canbepredicted.Forexample,theauditormayexpectgreater consistencyin comparinggrossprofitmarginsfromoneperiodtoanother thanincomparing discretionary expenses, such as research oradvertising. statementsofcomponentsofa diversifiedentity,thanwhenappliedto thefinancialstatementsoftheentityasa whole. example, theauditormayconsiderwhetherfinancialinformation,suchas budgetsor forecasts,andnon-financialinformation,suchasthenumber ofunitsproducedor sold,isavailabletodesignsubstantiveanalytical procedures.Iftheinformationis available,theauditormayalsoconsider thereliabilityoftheinformationas discussedinparagraphsA12-A13 above.
IsAcceptable(Ref:Para.5(d))
expectationthatcanbe acceptedwithoutfurtherinvestigationisinfluencedby materiality9andtheconsistency withthedesiredlevelofassurance,taking accountofthepossibilitythatamisstatement, individuallyorwhenaggregated misstated.SA330requirestheauditortoobtain morepersuasiveauditevidence increases,theamountofdifferenceconsideredacceptablewithout investigation decreases in order to achieve the desired level of persuasive evidence11. AnalyticalProceduresthatAssistWhen Forming an Overall
Conclusion(Ref:Para.6)
conclusionsformedduring theauditofindividualcomponentsorelementsofthe
9SA320, "Materiality inPlanning and PerforminganAudit",paragraphA13.
10SA330,paragraph7(b).
11SA330,paragraphA19.
financialstatements.Thisassists the auditor to draw reasonable conclusionson which to base the auditor"s opinion. requirestheauditorto revisetheauditor"sassessmentoftherisksofmaterial misstatementandmodifythe further planned audit procedures accordingly12. besimilarto those thatwould be used as riskassessmentprocedures. Investigating Results ofAnalytical Procedures(Ref: Para.7) evaluatingthose responsestakingintoaccounttheauditor"sunderstandingofthe entityandits environment,and with other audit evidenceobtained during the course of the audit. managementis unabletoprovideanexplanation,ortheexplanation,together withtheauditevidence obtained relevant tomanagement"s response, is not considered adequate. Modificationsvis-a-visISA520, "Analytical Procedures" SA 520, "Analytical Procedures" does not contain any modificationsvis-à-visISA 520.
12SA315,paragraph31.
Appendix
AnalyticalProcedures
Trends
Analysing account fluctuations by comparing current year to prior year information and, also, to information derived over several years.
Reasonableness
Tests are made by reviewing the relationship of certain account balances to other balances for reasonableness of amounts. Examples of accounts that may be reasonably tested are: Interest expense against interest bearing obligations Raw Material Consumption to Production (quantity) Wastage & Scrap % against production & raw material consumption (quantity) Work-in-Progress based on issued of materials & Sales (quantity) Sales discounts and commissions against sales volume Rental revenues based on occupancy of premises
Ratios
Analysis by computation of ratios includes the study of relationships between financial statement amounts. Commonlyused ratiosinclude: Elements of income or loss as a percentage of sales
Gross profitturnover
Accounts receivableturnover
Inventoryturnover
Profitability, leverage, and liquidity
Sources of information
Interim financial information
Budgets
Management accounts
Non-financial information
Bankand cash records
VAT returns
Board minutes
Discussion or correspondence with the client at the year-endquotesdbs_dbs20.pdfusesText_26
NORME INTERNATIONALE DAUDIT (ISA) ISA 520 Procédures