The auditor should apply analytical procedures by means of understanding of the
business and identifying audit risk.
Analytical procedures mean evaluation of financial information made by a
study of plausible relationship among both financial and non financial data.
Analytical procedures include the consideration of comparison of the
entity` financial information with other information.
The ISA states that analytical procedures include:-
The consideration of comparison with –
01. comparable information for prior periods
02.Analytical result of the entity ,from budgets or forecasts or expectations of the auditor
03.Comparison of the client ratio of sales to trade receivable with industry average.
04. Consideration of relationship between elements of financial information that are expected to conform to predated pattern based on the entities experience.