Categories for Assurance

Birmingham Bees Essay

Birmingham Bees Essay

The expectation should be precise enough to provide the desired level of assurance that differences that may be potential material misstatements, individually or when aggregated with other misstatements, would be identified for the auditor to investigate. As expectations become more precise, the range of expected differences becomes narrower and, accordingly, the likelihood increases that significant differences from the expectations are due to misstatements. The precision of the expectation depends on, among other things, the auditor’s identification and consideration of factors that significantly affect the amount being audited and the level of detail of data used to develop the expectation.

Documentation of Substantive Analytical Procedures

When an analytical procedure is used as the principal substantive test of a significant financial statement assertion, the auditor should document all of the following:

  1. The expectation, where that expectation is not otherwise readily determinable from the documentation of the work performed, and factors considered in its development
  2. Results of the comparison of the expectation to the recorded amounts or ratios developed from recorded amounts.