An Empirical Investigationof the Use of Analytical Review by External Auditors

Fraser, Ian; Hatherly, David; Lin, Kenny Z.

doi:10.1006/bare.1996.0034

Cited by 26 publications

(52 citation statements)

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“…review stage use was almost universally extensive, with a mean of 80%. It is clear that the final review stage dominated APs' use, which is consistent with the results from an earlier U.K. survey (Fraser, Hatherly and Lin, 1997). The previous Canadian research (Smith, 1983) found, on the basis of 12 interviews involving a limited number of firms, that APs were performed predominately at the final review audit stage and that auditors allocated approximately 5-15% of their total time to APs.…”

Section: Extent and Frequency Of Usesupporting

confidence: 75%

“…First, the Canadian figure is particularly low in view of the fact that the Canadian standard mandated the use of APs at the planning stage well over two years prior to the completion of our survey. Second, at the time of execution of the corresponding U.K. survey (Fraser et al, 1997), the use of APs had not yet been mandated in the U.K. The much lower use at the audit planning stage by smaller Canadian firms (as compared with U.K.) appears to indicate that some Canadian firms may have a relaxed attitude to the mandatory requirements of the auditing standard.…”

Section: Extent and Frequency Of Usementioning

confidence: 91%

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The use of analytical procedures by external auditors in Canada

Lin¹,

Fraser

2003

Journal of International Accounting, Auditing and Taxation

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Section: Extent and Frequency Of Usesupporting

confidence: 75%

Section: Extent and Frequency Of Usementioning

confidence: 91%

The use of analytical procedures by external auditors in Canada

Lin¹,

Fraser

2003

Journal of International Accounting, Auditing and Taxation

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“…These results are comparable with earlier research conducted in the US (Ameen & Strawser 1994;Fraser, Hatherly & Lin 1997). One explanation for the greater use of analytical procedures by larger audit firms is the client size.…”

Section: Audit Phases With Analytical Proceduressupporting

confidence: 88%

“…Blocher and Patterson (1996) have identified three types of AR techniques: trend analysis, ratio analysis and model-based. Fraser et al (1997) have provided a slightly broader classification perspective for AR techniques: non-quantitative (NQT) or judgmental, such as scanning; simple quantitative (SQT), such as trend, ratio and reasonableness tests; and advanced quantitative (AQT), such as regression analysis and artificial neural networks (ANNs) (Koskivaara 2004). …”

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confidence: 99%

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Integrating Analytical Procedures Into the Continuous Audit Environment

Koskivaara

2006

JISTEM

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The objective of this article is to show how to embed analytical procedures (AP) into the continuous audit environment. The audit environment is discussed in terms of audit phases, where the role of APs is to obtain evidence for auditors. The article addresses different characteristics of AP techniques. Furthermore, the article compares four different AP techniques to form expectations for the monthly sales values. Two of these techniques are simple quantitative ones, such as the previous year's value and the mean of the previous years' values. The advanced quantitative techniques are regression analysis and an artificial neural network (ANN)-based model. In a comparison of the prediction results, the regression analysis and ANN model turn out to be equally good. The development of these kinds of tools is crucial to the continuous audit environment, especially when most data transmission between companies and their stakeholders are moved into the electronic form.

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The use of analytical procedures in the United Kingdom

Mulligan

Inkster²

1999

Int. J. Audit.

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Statement of Auditing Standard (SAS) 410 requires auditors toapply analytical procedures at the planning and overall review stages of the audit. This paper reports on a questionnaire completed by audit partners in the United Kingdom (UK), investigating their usage of analytical procedures in the external audit. Results suggest that analytical procedures are used extensively in practice, particularly by Big 6 and large firms. However, simple techniques continue to dominate practice, particularly in smaller firms, and are considered effective by UK practitioners. This is surprising given that increased use of computers, which should make sophisticated techniques more cost-effective, is rated highly as an influence on the increased use of analytical procedures. The risk-based approach to audit is perceived by most respondents as the main factor promoting usage of analytical techniques. Increasingly, practitioners are relying on the results of analytical techniques to justify lower levels of detailed testing.The results of this survey indicate that, increasingly, auditors are willing to rely on the results of analytical procedures, when favourable, to justify a reduction in levels of detailed testing, consistent with drives for greater audit efficiency. The audit environment is perceived to influence the balance between detailed testing and analytical procedures -the length of engagement and the client's internal control structure are factors which have a strong influence on this balance. Whilst technology is perceived as an important influence on the usage of analytical procedures, this research demonstrates that simple techniques continue to dominate, and are perceived as effective. There is some usage of statistical techniques, particularly at the substantive testing stage, and by Big 6 firms. Big 6 auditors view lack of expertise as the primary impediment to greater usage of statistical techniques, indicating a potential skills gap.In summary, our results demonstrate that analytical procedures play an increasingly important role in the external audit. Further research exploring their use at the substantive testing stage, including the role of external and non-financial information, would be useful. In addition, where statistical techniques are applied in practice, issues relating to their effectiveness and efficiency could be examined. PRIOR RESEARCHFactors which influence the use of analytical procedures in practice are of interest to practi-

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An Empirical Investigationof the Use of Analytical Review by External Auditors

Cited by 26 publications

References 1 publication

The use of analytical procedures by external auditors in Canada

The use of analytical procedures by external auditors in Canada

Integrating Analytical Procedures Into the Continuous Audit Environment

The use of analytical procedures in the United Kingdom

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