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Analyse this

Auditors must be smart in determining when to use substantive analytical procedures, be skilled in their application, and demonstrate a high level of professional scepticism throughout, as Kate Acott and Janice Matthews outlined during their recent faculty lecture.

Substantive analytical procedures are a powerful tool for auditors if they are used in appropriate circumstances and performed correctly.

But they can be difficult to do well. Recent reports from the ICAEW Quality Assurance Department and the Financial Reporting Council’s Audit Inspection Unit (now renamed the Audit Quality Review Team) highlighted this as an area of weakness, and have put substantive analytical procedures firmly on the agenda.