8.3 Burlingham Bees - 1075 Words

8.3: Burlingham Bees Using Analytical Procedures as Substantive Tests Using Analytical Procedures as Substantive Tests 1. The requirements related to developing an expectation and conducting analytical procedures when those procedures are intended to provide substantive evidence is provided by the reorganized Audit Standard 2305 Substantive Analytical Procedures effective December 31, 2016 in the following list: a. â€Å"Analytical procedures are an important part of the audit process and consist of evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data. Analytical procedures range from simple comparisons to the use of complex models involving many†¦show more content†¦Financial information for comparable prior period(s) giving consideration to known changes ii. Anticipated results—for example, budgets, or forecasts including extrapolations from interim or annual data iii. Relationships among elements of financial information within the period iv. Information regarding the industry in which the client operatesâ⠂¬â€for example, gross margin information v. Relationships of financial information with relevant nonfinancial information d. â€Å"The auditors reliance on substantive tests to achieve an audit objective related to a particular assertion may be derived from tests of details, from analytical procedures, or from a combination of both. The decision about which procedure or procedures to use to achieve a particular audit objective is based on the auditors judgment on the expected effectiveness and efficiency of the available procedures. For significant risks of material misstatement, it is unlikely that audit evidence obtained from substantive analytical procedures alone will be sufficient (PCAOB, AS 2305.09).† e. â€Å"The auditor considers the level of assurance, if any, he wants from substantive testing for a particular audit objective and decides, among other things, which procedure, or combination of procedures, can provide that level of assurance. For some assertions, an alyticalShow MoreRelatedwall board12806 Words   |  52 Pages . . . . . . . . . . . . 291 Accounts Receivable Confirmations O T HE R C AS ES THAT DI S CUSS T OPICS RELATED TO THI S S ECTION 8.2 Northwest Bank . . . . . . . . . . . . . . . Developing Expectations for Analytical Procedures 8.3 Burlingham Bees . . . . . . . . . . . . . . Using Analytical Procedures as Substantive Tests INSTRUCTOR RESOURCE MANUAL — DO NOT COPY OR REDISTRIBUTE . . . . . . . . . . . . . . 245 . . . . . . . . . . . . . . . 251 INSTRUCTOR RESOURCE MANUALRead MoreDeveloping Management Skills404131 Words   |  1617 PagesConsider the following example: If you place in a bottle half a dozen bees and the same number of flies, and lay the bottle down horizontally, with its base to the window, you will ï ¬ nd that the bees will persist, till they die of exhaustion or hunger, in their endeavor to discover an issue through the glass; while the ï ¬â€šies, in less than two minutes, will all have sallied forth through the neck on the opposite side. . . . It is [the bees’] love of light, it is their very intelligence, that is their undoing