Basically, analytical procedures consist of evaluations of financial information made by an auditor of plausible and expected relationships among both financial and non-financial data. The analyses can range from simple comparisons (e.g., the current year with the preceding year) to the use of complex models involving many relationships and elements of data (e.g., regression analysis).

The use of analytical procedures is one method of increasing auditor efficiency. Simple analytical procedures comparisons, ratio analysis, trend analysis, and common size financial statements are effective as attention directing tools in the planning and final review stages of the audit. Those procedures are also effective when used in conjunction with a minimum level of tests of details as a substantive test.

Is that all? Yes, that is how I would describe about analytical procedure. On its implementation, analytical procedure could be uneasy. I believe you knew about that. But let’s see if you can answer 10 questions on the following analytical procedure quiz. Relax, the answers has been provided already, as usually. However, try to not read the answer—use your judgment first. That way, you can do self-assessment.