What is An Analytical Procedure?: Definition, Use, and Types


Analytical procedures are the procedures that use by auditors to obtain audit evidence so that they could assess and evaluate the financial information that presents in the financial statements based on the concept that the financial information has plausible relationships with the other’s financial and non-financial information or data.

Auditors use the analytical procedures in any stage of the audit such as the planning, execution stages ( substantive), and conclusion stage.

This procedure helps the auditor to pay more attention to the areas that are unusual changes. In other words, in the areas that have a significant change.

For example, total revenues from visitors that visited Angkor Wat per year have a close relationship with the number of visitors per year.

The increasing or decreasing revenues per week, month, or year are expected to be affected by the number of visitors at the equivalence percentages in that corresponding week, month, and year.


Analytical procedures are part of the audit technique that could help them to have a better clue to pay more attention to the areas that might contain the risks of material misstatement.

These procedures use other information and data to assess other information or data. Trend analysis, as well as reasonableness testing, are also part of analytical procedures. For example, the audit might review the trend of certain revenue or expenses from time to time.

For example, auditors break down the revenues per year into months and review the lowest and high revenues records in financial statements. They then assess whether these trends fluctuate and align with their expectation or the knowledge they know.

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Using analytical procedures:

Analytical procedures are normally used in all three steps of audit: Planning, substantive, and conclusion stages.


The pre-analytical procedure is normally used to assess the reliability of data as well as to assess the possible misstatement that might contain in the financial statements. This procedure is also used by the auditor to gain a better understanding of the client’s business and environment.

Such procedures include comparing the current financial data to the previous year as well as to the budget. Comparing some lines of items in the financial statements with the projections made by the auditor based on certain conditions or other financial data.

These procedures could help auditors gain a better understanding of the client’s financial environment. Once the analytical procedures are completed, auditors will be able to identify which areas they should pay more attention to during the audit

Therefore, auditors will then develop the audit strategy and tailor the audit procedures to address those concerning accounting items.

Substantive procedure:

The analytical procedure is also used in the substantive testing of financial information. As said above related to the revenue of Angkor Wat, the auditor might perform an analytical review on the completeness of income records in the income statement in addition to other testing procedures.

For example, monthly trend analysis of revenue records for the whole year compared to the monthly trend of the visitor. The auditor might also break down the monthly revenues by visitor’s nations as well as sex compare to the quantitative data in the same condition.

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In addition to trend analysis, the auditor might use other procedures as part of their analytical procedure like projection analysis.

Reporting and conclusion:

The analytical procedure could also use at the conclusion stage of an audit. Normally users perform an overview of the financial reporting after their substantive audit to ensure that data and information in the financial statements are in accordance with their understanding.

The procedures that they normally perform include scanning through the financial statements, comparing the audit financial statements to the subsequent period after the audit, and reviewing the disclosures to financial statements.