Isa 520

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INTERNATIONAL STANDARD ON AUDITING 520

ANALYTICAL PROCEDURES

(Effective for audits of financial statements for periods beginning on or after December 15, 2009)

CONTENTS

Introduction|Paragraph||
|||
Scope of this ISA ........................................................................................|1|| Effective Date .............................................................................................|2|| Objectives ..................................................................................................|3|| Definition ...................................................................................................|4|| Requirements|||

Substantive Analytical Procedures ..............................................................|5|| Analytical Procedures that Assist When Forming an Overall||| Conclusion ............................................................................................|6|| Investigating Results of Analytical Procedures ..........................................|7|| Application and Other Explanatory Material|||

Definition of Analytical Procedures ...........................................................|A1–A3|| Substantive Analytical Procedures ..............................................................|A4–A16|| Analytical Procedures that Assist When Forming an|||

Overall Conclusion ..............................................................................|A17–A19|| Investigating Results of Analytical Procedures ..........................................|A20–A21|| |||

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.”

AUDITING|

433ISA 520

ANALYTICAL PROCEDURES

Introduction

Scope of this ISA

1. This International Standard on Auditing (ISA) deals with the auditor’s use of analytical procedures as substantive procedures (“substantive analytical procedures”). It also deals with the auditor’s responsibility to perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion on the financial statements. ISA 3151 deals with the use of analytical procedures as risk assessment procedures. ISA 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. This ISA is effective for audits of financial statements for periods beginning on or after December 15, 2009.

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 statements are consistent with the auditor’s understanding of the entity.

Definition

4. For the purposes of the ISAs, 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)

1|ISA 315, “Identifying and Assessing the Risks of Material Misstatement through Understanding the|| |||
2|Entity and Its Environment,” paragraph 6(b).|||
|ISA 330, “The Auditor’s Reponses to Assessed Risks,” paragraphs 6 and 18.|| |||
ISA 520|434||

ANALYTICAL PROCEDURES

Requirements

Substantive...
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