Overall Review of the Audit

Running head: OVERALL REVIEW OF THE AUDIT
OVERALL REVIEW OF THE AUDIT
Name of the student:
Name of the university:
Author note:

1OVERALL REVIEW OF THE AUDIT
The analytical procedures is applied in the audit which is related financially for the
ratio purpose of the organization in which the comparison is done with the previous fiscal
years of the organization and also for the large profit and loss account(Glover, M, & Drake,
2014). There are various analytical procedures undertaken by the auditor as a part of the
overall review they are as following;
Independent expectation needs to be developed:
The development of the independent expectation is the most important analytical
procedures undertaken by the auditor. The exception is the prediction which is important in
audit, the predictions can be in various forms such as in number, in the form of percentage, a
direction or it can be in the form of approximation. These all forms are totally dependent on
the precision which is desired. The development of the analytical procedures helps in
developing the expectations by making identification of relationships like between the market
trends and revenue of the client that is based on the knowledge, business or on other trends
which is leading to an independent expectation. The expectation is also based on the ratio
amount, the prediction is based on the various types of forms which is useful for the financial
terms (Pike, Curtis, & Chui ,2013)
Significant difference needs to be defined:
The defining of the significant difference is the second step that is undertaken by the
auditor. In the process of designing and performing the analytical procedures the auditors
needs to consider the difference from the expectation which can be known through the
investigation. The difference that the auditor gets by doing the further investigation in terms
it is said to be as threshold. The term is defined as the values which are numeric or in terms
of percentages, the establishment of the threshold seems to be tough for the analytical
procedures, to get prevented from this prospective the threshold need to be determined by the

2OVERALL REVIEW OF THE AUDIT
auditor in the planning process. After the completion the significant difference needs to
checked for the clear clarifications so that it can be get that which area the correction is
needed. The threshold can be defined as the acceptable amount which relates to the
misstatement which is potential and this misstatement should not go out of the planning
materiality. The planning materiality should be small enough so that it is liable for the auditor
in rectifying the misstatements that is based on the material or it can be individually or when
it is aggregated with the misstatements (Gunny &Zhang, 2013).
Computing the difference:
The computation of the difference is the third step that is undertaken by the auditor.
The computation of the difference determines the comparison between the values which is
expected and the recorded amounts and the differences needs to be significantly identified. It
should be noted as on important basis that the computation of the differences needs to only
done when after the consideration of an expectation. The computation of the differences from
the balances which are prior based and then letting the outcome effect the difference that is
expected is not the appropriate way. The computation of the differences is very important
aspects that needs to be clarified for the substantive procedures related to analytical (Chan,
&Kogan, 2016)
Investigation of the significant differences and drawing the conclusions:
The drawing of the conclusion and investigation of the significant differences is the
fourth step that is undertaken by the auditor. The differences tell about the increased in the
likelihoods of the misstatement, the precision degree needs to be greater if the likelihood is
greater it is leading to the misstatement difference. The explanation needs to be in the full
amount and the difference is not only considered as a part that is exceeding the threshold. The
factors which is causing the difference needs to be gone through before, and not most