One substantive analytical procedure involves the auditor calculating an expected balance for an account and then comparing it to the actual account balance.

Question

Quizplus · Accepted Answer

This substantive analytical procedure is commonly known as ratio analysis or trend analysis and involves the auditor comparing the current year account balance to an expected balance based on prior years’ balances or industry benchmarks. The purpose of this procedure is to identify significant fluctuations or anomalies in the account balance that may need to be further investigated.

One Substantive Analytical Procedure Involves the Auditor Calculating an Expected