Definition

Noun: 1. An Auditing Procedure: A specific method used in financial auditing that involves examining relationships and ratios between different financial statement accounts. Its primary purpose is to identify unusual fluctuations, significant changes, or unexpected trends that may indicate errors, fraud, or areas requiring more detailed investigation.

Usage Examples

• Noun:
  • The auditor performed an analytical review of the company's income statement and balance sheet.
  • A key step in the planning phase is to conduct an analytical review to assess risk.
  • The significant increase in the expense ratio flagged during the analytical review led to a more detailed audit of those accounts.

Advanced Usage

• "To perform/carry out/conduct an analytical review": This is the standard collocation describing the action of executing this auditing procedure.
• "Results of the analytical review": Refers to the findings or conclusions drawn from applying this procedure.
• In practice, an analytical review is often contrasted with tests of details (like checking individual invoices). It is a higher-level, comparative analysis.

Variants and Related Words

• Analytical Procedures (n): A broader term often used synonymously with "analytical review," especially in formal auditing standards. It encompasses the same concept of evaluating financial information through analysis of plausible relationships.
• Ratio Analysis (n): A core technique an analytical review, focusing specifically on calculating and interpreting financial ratios (e.g., current ratio, debt-to-equity).
• Trend Analysis (n): Another core technique used in an analytical review, examining financial data over multiple periods to identify patterns or deviations.

Synonyms

• Analytical Procedures: (The most direct synonym in professional contexts)
• Financial Statement Analysis: (Broader, can include analysis for investment purposes, not just auditing)
• Ratio and Trend Analysis: (Describes the primary techniques used)

Related Phrases

• Substantive Analytical Procedures: A formal auditing term for when analytical reviews are used as the primary evidence for an assertion, as opposed to just for planning or risk assessment.
• Plausibility Check: A less technical term describing the general goal of an analytical review—to see if the numbers make sense in relation to each other and expectations.

Noun

1. an auditing procedure based on ratios among accounts and tries to identify significant changes