[Determined CPA]

I know this is true – I just don’t understand why. Does anyone know?

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[nishvik]

hmmm good question, even I just have bookish knowledge and will try to explain what the book says.

In certain situations analytical procedures are more effective and efficient means of gathering evidence than test of details and in those cases analytical procedures may be used as substantive tests.

So i guess its optional with Substantive procedures because it may not be viable in situations where there is high risk of material mistatement and the auditor would like to do more extensive test of details rather than just using ratio analysis aka Analytical procedures.Also analytical procedures may pinpoint where the problem is but it wont show what the actual problem is.

I really have NO audit experience even during my college days(not in US) I dint have such audit stuff and hence its too hard for me to comprehend audit,well my score also says that.I try hard to imagine how in real world all this audit stuff works but aaaghhh have a tough time with some of this audit language,alomst like literature.But I am sure I will give my bestest

I hope what I explained with regards to your queries is correct. Thanks for posting the question as it made me to open the book and read and explain it here.It kind of is a nice exercise 😉

Good Luck

FAR- 79 -->Becker self study, Final review & Flashcards
REG -72-->Becker ,76-->Becker plus Wiley test bank
AUD- 73 Becker,72-->Becker+Wiley,69-->Added ninja notes,89 --> Added Gleim review
BEC- 84 Becker plus Wiley Test bank

I am Done !!!!

[nishvik]

hmmm good question, even I just have bookish knowledge and will try to explain what the book says.

In certain situations analytical procedures are more effective and efficient means of gathering evidence than test of details and in those cases analytical procedures may be used as substantive tests.

So i guess its optional with Substantive procedures because it may not be viable in situations where there is high risk of material mistatement and the auditor would like to do more extensive test of details rather than just using ratio analysis aka Analytical procedures.Also analytical procedures may pinpoint where the problem is but it wont show what the actual problem is.

I really have NO audit experience even during my college days(not in US) I dint have such audit stuff and hence its too hard for me to comprehend audit,well my score also says that.I try hard to imagine how in real world all this audit stuff works but aaaghhh have a tough time with some of this audit language,alomst like literature.But I am sure I will give my bestest

I hope what I explained with regards to your queries is correct. Thanks for posting the question as it made me to open the book and read and explain it here.It kind of is a nice exercise 😉

Good Luck

FAR- 79 -->Becker self study, Final review & Flashcards
REG -72-->Becker ,76-->Becker plus Wiley test bank
AUD- 73 Becker,72-->Becker+Wiley,69-->Added ninja notes,89 --> Added Gleim review
BEC- 84 Becker plus Wiley Test bank

I am Done !!!!

[Anonymous]

If you think about what analytics are doing it will make more sense, there are several types of analytics, trends, predictive, etc. We use them to flux balances and see if there were big changes, based on our knowledge did we expect big changes…if not, let's find out why and explain it, etc. However, none of these are really testing balances they are just managing our expectations…thus they are optional and usually additional on top of our testing of details (balances) in auditing. That's great that you fluxed that difference and found out what it was…but now you also need to test the balance that is over the materiality threshold. If you do enough of the test of details to get comfortable that the balance is fairly stated, the analytics are sort of just a bonus. Hope that makes sense!

[Anonymous]

If you think about what analytics are doing it will make more sense, there are several types of analytics, trends, predictive, etc. We use them to flux balances and see if there were big changes, based on our knowledge did we expect big changes…if not, let's find out why and explain it, etc. However, none of these are really testing balances they are just managing our expectations…thus they are optional and usually additional on top of our testing of details (balances) in auditing. That's great that you fluxed that difference and found out what it was…but now you also need to test the balance that is over the materiality threshold. If you do enough of the test of details to get comfortable that the balance is fairly stated, the analytics are sort of just a bonus. Hope that makes sense!

[acamp]

Depends on what type of analytic we're talking about, ratio/review type analytics mentioned above, or substantive analytical procedures, where you are attempting to prove out a balance without performing substantive detail testing.

That is, payroll (a common substantive analytic) has a balance of $1,000,000 for 20 people.

You can select some entries and prove out that the amount recorded for someone is correct (substantive detail test).

or.

You can form an expectation based on previously audited date

There were 18 people here last year, payroll was $950,000 ($52K per person avg)

This year there are 20 people, so based on last year we assume 20*$52K = $1,040,000. Compare the amount to the actual reported and submit to some sort of threshold…

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[acamp]

Depends on what type of analytic we're talking about, ratio/review type analytics mentioned above, or substantive analytical procedures, where you are attempting to prove out a balance without performing substantive detail testing.

That is, payroll (a common substantive analytic) has a balance of $1,000,000 for 20 people.

You can select some entries and prove out that the amount recorded for someone is correct (substantive detail test).

or.

You can form an expectation based on previously audited date

There were 18 people here last year, payroll was $950,000 ($52K per person avg)

This year there are 20 people, so based on last year we assume 20*$52K = $1,040,000. Compare the amount to the actual reported and submit to some sort of threshold…

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[CanIpassYou Aud]

Analytical Procedure (A/P) is very efficient, but it is not effective. it only gives the auditor an overall view but no the specific item. if you want to test specific account, balance, or transaction, the auditor needs to use test of details. good luck on ur study

FAR-Passed
BEC-Passed
REG-Passed
AUD-Passed
Materials: Becker+Ninja Notes/Ninja MCQ/Ninja Flashcards
Click my name to view my LinkedIn account.

[CanIpassYou Aud]

Analytical Procedure (A/P) is very efficient, but it is not effective. it only gives the auditor an overall view but no the specific item. if you want to test specific account, balance, or transaction, the auditor needs to use test of details. good luck on ur study

FAR-Passed
BEC-Passed
REG-Passed
AUD-Passed
Materials: Becker+Ninja Notes/Ninja MCQ/Ninja Flashcards
Click my name to view my LinkedIn account.

[Determined CPA]

Oh wow – thank you all for your detailed responses. It really does help. I don't have audit experience either, so it does make it difficult to understand the flow of everything. In trying to get the extra 5 points I need I thought it best to try and understand the material instead of just accepting it and this was one of the things I didn't understand the ‘why' behind the reason.

thank you all – makes much more sense now!

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Determined CPA]

Oh wow – thank you all for your detailed responses. It really does help. I don't have audit experience either, so it does make it difficult to understand the flow of everything. In trying to get the extra 5 points I need I thought it best to try and understand the material instead of just accepting it and this was one of the things I didn't understand the ‘why' behind the reason.

thank you all – makes much more sense now!

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Author]

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