AFM351 Study Guide - Final Guide: Inventory Turnover, Financial Statement Analysis, Audit Risk
15 Jul 2018
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Practitioner responsible for planning audit to reduce audit risk to an acceptably low level. Analytical procedures done to identify significant risk areas. Speci cally, analytical procedures should be performed as part of the risk identi cation process to: Assist the practitioner in gaining a better understanding of the client. Identify accounts that are at risk of material misstatement by highlighting unusual. Cas 520 analytical procedures de nes analytical procedures as an evaluation of nancial information through analysis of plausible relationships involving both nancial and non- Consider reliability of prior year if not audited before or accounting policies/framework changed. Make sure to annualize numbers if needed (balance sheet does not need to be annualized) Common financial statement analysis ratios and what they could mean in an audit context. Receivable turnover ratio indicates a risk that there could be. If turnover is deteriorating: valuation and existence of receivables. Perform subsequent receipt testing agree customer amounts included in the ending accounts receivable.
