Document ID: chunk:federal_register_of_legislation:F2021C01244:reg:1:p2
Version: federal_register_of_legislation:F2021C01244
Segment Type: reg
Provision Reference: reg 1 (pt 2/7)
Character Range: 8502–11902

financial report.  ASA 315[1] deals with the use of analytical procedures as risk assessment procedures.  ASA 330 includes requirements and guidance regarding the nature, timing and extent of audit procedures in response to assessed risks; these audit procedures may include substantive analytical procedures.[2]

Effective Date

2.                   [Deleted by the AUASB.  Refer Aus 0.3]

Objectives

3.                   The objectives of the auditor are:

(a)                To obtain relevant and reliable audit evidence when using substantive analytical procedures; and

(b)                To design and perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion as to whether the financial report is consistent with the auditor's understanding of the entity.

Definition

4.                   For purposes of the Australian Auditing Standards, the term "analytical procedures" means evaluations of financial information through analysis of plausible relationships among both financial and non-financial data.  Analytical procedures also encompass such investigation as is necessary of identified fluctuations or relationships that are inconsistent with other relevant information or that differ from expected values by a significant amount.  (Ref: Para. A1-A3)

Requirements

Substantive Analytical Procedures

5.                   When designing and performing substantive analytical procedures, either alone or in combination with tests of details, as substantive procedures in accordance with ASA 330,[3] the auditor shall: (Ref: Para. A4-A5)

(a)                Determine the suitability of particular substantive analytical procedures for given assertions, taking account of the assessed risks of material misstatement and tests of details, if any, for these assertions; (Ref: Para. A6-A11)

(b)                Evaluate the reliability of data from which the auditor's expectation of recorded amounts or ratios is developed, taking account of source, comparability, and nature and relevance of information available, and controls over preparation;
(Ref: Para. A12-A14)

(c)                Develop an expectation of recorded amounts or ratios and evaluate whether the expectation is sufficiently precise to identify a misstatement that, individually or when aggregated with other misstatements, may cause the financial report to be materially misstated; and (Ref: Para. A15)

(d)                Determine the amount of any difference of recorded amounts from expected values that is acceptable without further investigation as required by paragraph 7 of this Auditing Standard.  (Ref: Para. A16)

Analytical Procedures that Assist When Forming an Overall Conclusion

6.                   The auditor shall design and perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion as to whether the financial report is consistent with the auditor's understanding of the entity.  (Ref: Para. A17-A19)

Investigating Results of Analytical Procedures

7.                   If analytical procedures performed in accordance with this Auditing Standard identify fluctuations or relationships that are inconsistent with other relevant information or that differ from expected values by a significant amount, the auditor shall investigate such differences by:

(a)                Enquiring