UK Accounting Glossary
Analytical auditing is simply using analytical procedures whilst auditing to allow the auditor to understand the business, and changes to a clients business.
These analytical procedures are part of the many tools an auditor will use, and can help to highlight areas of concern or areas of growth.
Analytical auditing is the adoption of an analytical approach to an audit, whereby you would compare figures and various other non-financial and financial data either with external or internal data, to determine whether the image that has been presented is reasonable.
Analytical auditing and the procedures of analytical auditing can be used at any stage of an audit, whether that is whilst planning, during or in the final stages of an audit when any tests of the details have been finished.
The purpose of applying analytical procedures in planning an audit is to assist in planning the nature, timing, and extent of auditing procedures that will be used to obtain evidential matter for specific account balances or classes of transactions.
The primary purpose of substantive analytical procedures is to obtain assurance, in combination with other audit testing (such as tests of controls and substantive tests of details), with respect to financial statement assertions for one or more audit areas.
Analytical procedures are used by accountants in multiple levels of service, and they are critical to evaluating financial data and variations that occur in financial data. In other words, analytical procedures are used throughout the audit engagement – in audit planning, execution and review.