On the use of analytical review in audit by fdjerue7eeu

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									On the use of analytical review in audit
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Abstract
   Analytical review of audit technology is a basic method used in the audit process is
very important, and it is very broad, in some cases, there is still the advantages and
disadvantages, due to the presence of these advantages and disadvantages, leading
certified public accountant and did not full and reasonable use, and regarded it as
Mangrenmoxiang in this paper, the audit cited many examples to explain the failure of
the audit process in the future should pay attention to the use of analytical review,
making it a unique advantage of audit tools and audit sword, but also pointed out that
there are as review some limitations, can not rely too much on analytical review, if the
blind pursuit of audit analytical review will also end in failure.
Key words: analytical review; audit; use; limitations


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On the use of analytical review in audit
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   Analytical review of audit technology is a basic way, it is the auditor of the audited
unit by comparing a variety of financial data and other economic data, to obtain audit
evidence, audit findings made by the method. Analytical review of the use of very
broad, almost applicable to all types of audit projects throughout the audit process. In
the particular case, analytical review of the results can be used as audit evidence, even
in the implementation of the specific purpose of the audit or review of small balance
accounts, can be made only through analytical review audit findings.
Conducting analytical review, the CPA has increased professional skepticism, doubt
fraud is likely to be found in order to avoid "seeing the tree but not the
forest", can greatly reduce the audit to obtain audit evidence of the
workload, thereby saving manpower time, reduce costs, analytical review can also use
the reliability of financial statements evaluation, the better to avoid mistakes and
ensure the quality of audit work. But there is such a complete audit of means, often
there are some cases in the real audit of the audit ended in failure, such as
"Dawn shares" case, as auditors during the audit did not make
full use of analytical review but have not found a variety of business means of false,
inflated income 5.82 million yuan and profit of 630,000 yuan in fact, to the huge
losses to investors.
First, the use of analytical review in audit situations
Analytical review refers to "certified public accountant of a major
percentage of the audited units or trends, including the investigation of these
abnormal changes in rates or trends and with the expected amount and related
information changes." Easy to see through the data is the essence of
analytical review relationship or contact between the modeling, confirmed that
significant differences, and to make a significant difference in the causes of test
substance or explanation. Significant differences, in particular, is a major
non-expected differences in both the Audited significant accounting issue, but also
important areas of the audit. For example: Forest Travel Co., Ltd. has been over the
past two years, tourism revenues of 15% to 20%, but increased to 25% in 2006, the
auditors should be noted that this index changes, a detailed analysis of this change is
due to the rapid development of tourism, the economic environment changes (such as
population growth and rising costs of the tourist industry accounted for the proportion
of tourism revenues decline) caused by the presence or misstatement of financial
statements due to find out the real cause of increase tourism revenue.
1, the audit planning stage
That in the audit planning stage, to help auditors to determine the nature of other audit
procedures, time and scope, focus audit areas typically include subjective judgments
of management accounting issues (such as depreciation of fixed assets valuation
method of choice), abnormal changes in the accounting statement items and so on.
Plan the audit work, the Shi Yong Analytical procedures The main purpose of the
audit staff in order to use the operation to be audited better understanding and
recognition of Guanxi among data and unexpected anomaly of fluctuations, Yipian
identify potential Cuobaofengxian there areas. Pointed out that the high-risk areas lie
in order to develop a targeted audit program to audit more efficient and effective.
Weak internal control systems such as accounting statement items, major impact on
project financial statements, accounting statements, which occurs prior to closing
large or unusual financial services (such as at the end of a large number of sales), as
well as business and other related persons.
2, the implementation phase of the audit
Audit the implementation phase, directly as analytical review procedures to collect
and account balances and transactions with the various types of evidence for the
specific purpose identified. For example, the audit year, inventory turnover and
inventory turnover rate of pre-defined basic line may be to judge the cost of ending
inventory and cost of goods sold from the current whole, is reasonable. If you use the
details of tests, to obtain the same conclusion to spend a lot of time. It is noteworthy
that in the implementation stage, the analytical review to provide evidence of the
majority are only corroborative evidence, its probative force is relatively weak, must
be confirmed with other evidence combination specifically identified on a certain
matter. But this does not affect the CPA use of this procedure, since the use of
analytical review can bring savings in manpower and time. Particularly on some
important projects, the implementation of analytical review procedures of the project
can achieve the specific audit objective, very economical.
3, the audit report stage
End of the audit, the use of analytical review can be major issues or financial
problems on the final comprehensive analysis of the relationship if the information is
unreasonable to consider the additional audit procedures or revising the audit report.
If Audited balance is higher than the same size with the industry average of other
companies, but profit margins are lower than the average level of assets, it indicates a
higher financial risk of the enterprise, companies will continue to adversely affect the
viability of this time comments on the audit report should make a careful choice of the
type. Stage in the audit report, analytical review of all financial statements and reports
of the planning phase of the audit period must be used, being used to examine the
overall reasonableness of the accounting statements for final review.
It is noteworthy that in itself is not evidence of analytical review, but that the direction
of further investigation, but also the implementation of other details of the test results
of the analytical review to be confirmed.
Second, the current use of analytical review of specific problems and causes
Although the analytical review of the audit process is essential audit tools, the same is
also very widely used, but in case of occurrence of the audit point of view, the
concrete application of analytical review in more or less problematic, specifically
manifested in :
(A) the audit process is simply not the use of analytical review
Although defined in the audit planning stage to the use of analytical review and
reporting stage, but actually part of the auditors for some reason, often going through
the motions of the audit process, hastily, there is no independent auditing standards in
accordance with the requirements of the use of of review procedures to determine the
importance of the audited accounting issues and key audit areas, or no use of
analytical review by the trial on the overall reasonableness of the accounting
statements for final review. Certified Public Accountant in the audit of financial
statements in the application of analytical review if you do not attach importance to
this process, is equivalent to Mangrenmoxiang, one-sided and even easier to come to
the wrong audit findings, lead to greater audit risk.
In 1996, King China has 566 million yuan source fictitious profits, inflated capital
fund 657 million yuan. A result, the company's fixed assets, construction in
progress, intangible assets have increased significantly to profits in 1995 to 670,000
yuan by the "surge" to 5.7093 billion in 1996, return on equity
rate of 0.034 yuan in 1995 / share to 21.51 yuan in 1996 / share, the stock price soared
from the 3 yuan to 30 yuan. The face of these artificial profits adjustments take Joan
annual accounting statements of public sources in 1996 the Chinese accounting
firm's audit practice, issued a grave containing the contents of the audit
report false.
Source of audit cases in Hainan China, if the auditor can make full use of analytical
review in the planning stage, the profit from the trend analysis report, it is easy to see
the source of profits by the King China in 1995 to 670,000 yuan,
"soared" to 1996 5.7093 billion years, return on equity rate of
0.034 yuan in 1995 / 1996 shares to 21.51 yuan / share the risk of abnormal growth
point; profit from the structural analysis of the statements, we can find the source of
profits Hainan China main income in the total amount of 34 times, Joan people do not
source of profit growth is the main business income. Source of audit cases in Hainan
China, even if the auditor is not concerned in the development of plans to change the
risk of abnormal profits in the implementation phase of the audit report did not find
evidence of false profits; but if the report stage of the audit, review of personnel able
to use of the overall review of the reasonableness of accounting statements to make a
final review, is bound to find abnormal changes in the profit report, these anomalies
will guide the direction of the field audit staff review the implementation of additional
audit procedures to confirm worries added to obtain sufficient, appropriate audit
evidence.
(B) audit the use of analytical review is not appropriate
   Currently, in accordance with the "Guidelines" requirements,
the application of analytical review in audit approach has attracted the concern of the
audit staff, as auditors of the analytical review of the understanding and application of
skills in different degrees of bad, only on the account book of the analysis, not from
the actual start. In general the degree of attention and use is not high enough,
analytical review of the role of the audit process has not been fully realized. Therefore
it is not the auditor when not appropriate in the use of analytical review is the
over-reliance on analytical review.
1, the use of inappropriate analytical review
Certified Public Accountant in the audit of a subsidiary of the entertainment room
five-star hotel, located in prime locations in the entertainment room, business is quite
prosperous. Carried out in its annual audit, found no other abnormalities, the basis of
good accounting, accounts management standards, accounts neatly bound form, but
its profit and loss account reflects the annual loss in more than 20 million. Certified
Public Accountants and in accordance with the loss of more than 20 million for the
balance of the financial index analysis and investigation of their credentials, ask the
hotel under the certificate of accounting personnel, and accounting personnel made
their interpretation. CPA blindly trust in its accounting personnel, the discovery of its
revenue, and costs when there are problems and no additional mass of detailed
analysis, issued an audit report, after the lead audit failure. CPA license restricted to
specific accounts and oral evidence, to expect this analysis to discover significant
Cuobi, is often duplication of efforts. I understand that according to the basic situation,
the initial determination of its very possible underreporting of income, inflated costs,
tax evasion and tax situation. As long as the CPA was found to reflect the profit and
loss account over 20 million annual loss for its further analytical review, append its
revenue, and costs the details of the test to be confirmed, did not listen to the
interpretation of accounting personnel, it is not difficult to find the inflated cost of the
fact that nearly 30 million.
2, over-reliance on analytical review
In early 1999, a public accounting firm to conduct an audit of the ABC, and issued an
unqualified audit report. The end of 2000, China Securities Regulatory Commission
made a profit on the ABC sample. The reports of serious distortion and inflated assets
8,996 yuan, 19.56 million yuan inflated debt, more seriously, the problem of the
enterprises in the less than frequent mention fewer illegal transfer costs, costs losses
are to narrow the scope of consolidation loaded with more than 90% of the amount of
false accounting by series of false accounting inflated out.
Auditors in the planning and reporting phase, carried out on the statements of profit
ratio analysis, the main business income reached 409.43 million yuan, 35.41 million
yuan net profit, earnings per share of 0.1846 yuan, net assets yield 6.31%. Which also
made the purchase and sale of materials and products contracts, the import and export
invoices, customs documents, as well as bank deposits and transactions of the
External Confirmation and other evidence of several major projects, and found no
abnormality. After sampling the CSRC said the main reason is because the
management of ABC company began fabricating false information and relevant
evidence. It can be seen over-reliance on analytical review audit staff, will make it
one of the causes of audit failure.
Of course, these few cases, the certified public accountant in the practice of analytical
review was also done, but for analytical review found that the abnormal or unexpected
issues, additional details of the test is not appropriate, or to obtain audit evidence is
not correct, the same will lead to audit failure. Therefore, the implementation of
analytical review procedures CPA must pay attention to the results of analytical
review procedures should be made by other evidence to support or explanation,
otherwise, the implementation of analytical review procedures will not make any
sense.
Analytical review is a registered accountant, a sword, is also an important means of
auditing, as long as the skilled application of this sword and this means no certified
public accountant with extensive knowledge, rich experience and high sensitive
practice. But because of this, the use of certified public accountants often do not
attach importance to analytical review and as Mangrenmoxiang, arbitrarily audit
findings.
Third, strengthen the use of analytical review in audit
"Independent Audit Guideline No. 11 - analytical review"
clearly defined during the accounting statements of the audit, analytical review
procedures should be used. The main problem now is to promote the technology firm
hand to strengthen the promotion and application against Mangrenmoxiang, identify
important accounting issues and key audit areas, decreasing auditing risk and improve
audit quality, I think from the following aspects:
1, to raise awareness, emphasis on the learning and application of analytical review
techniques
Li Jinhua, Auditor-General pointed out that "Today's audit is no
longer a simple audit, the audit environment is changing, the object is changing, audit
techniques and methods are changing, changing society, the core strategy for the
future of the audit should be Let our society safer, make our government more
efficient. "audited the new things in the audit of the quality and impact of
various factors, human factors are the first. Therefore, enhancing the auditors to learn,
master, and apply advanced knowledge of audit techniques and methods is an
effective application of advanced technology and methods of audit priority.
2, strictly abide by the independent auditing standards, standard audit practices,
improve the ability of the auditor's professional judgments
In the audit process, the analytical review of the application is no longer an option.
Knowledge in solving problems, quality issues, we must strengthen the
auditor's audit quality awareness, awareness of risk awareness and norms,
promote the audit infrastructure, standardized audit institutions and auditors in
auditing.
3, a correct view of the limitations of analytical review, however, depend heavily on
analytical review
Focus to help grasp the audit analytical review, save audit time and improve audit
efficiency, can be used in all stages of the audit process, but also has its limitations,
one is internal control failure, based on the data itself analytical review false, resulting
in Analysis of the results is false; the second is the lower accuracy of the data,
analytical review conclusion may be drawn from failure, such as the impairment of
assets, the cost of withholding the number, the data with a very subjective sex, the
lower the accuracy of analysis may be inaccurate, and therefore the audit process can
not be too much reliance on analytical review concluded.
Of course, there are certain limitations of analytical review. Such as: use the industry
average inventory turnover rate of inventory turnover to determine Audited reasonable.
But we must consider the information industry to meet the specific conditions and
Audited level, when the unit inventory valuation methods and where the industry is
not the typical method used in the same time, industry data comparability and
usefulness will be limited, analytical review of the effect is be affected.
Certified Public Accountant in China faster and more simple and convenient in order
to make the audit or Audited Cuizhao do audit, due to time and cost constraints, there
was simply not enough hard thinking to review the relevant information, and some
simply do not go and collect evidence because in the beginning of each year, firms
have been relatively busy, and think about what kind of issue as long as the previous
year's report, the next year and also about, of course, the same audit
opinion issued. Driven by interests, in order to obtain personal benefit at the expense
of firms at the expense of excessively accommodating customers, then the audit
failure is not accidental.
In short, the main emphasis of the analytical review and review of audit failure in
heavy multi-firm case is not a report based on actual requirements, analytical review
of the guidelines so perfect, so of course everyone should have a complete accounting
firm The analytical review system, in determining the system, to be implemented step
by step up.

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