The application of analytical procedures in the audit process : a South African perspective

Abstract

The application of analytical procedures has become an integral part of the audit process. It has the ability to increase audit quality and is an effective and efficient manner of gathering audit evidence. Indications are that the application of these procedures will increase in audits of the future. Numerous studies have been conducted in various countries to determine the auditor’s application of analytical procedures in the audit process. However, little is known about how auditors in South Africa apply analytical procedures as part of their audit process. The objective of this study was to investigate the application of analytical procedures in the audit process by South African auditors. A qualitative research approach was selected, utilising three units of analysis, and data was collected through interviews with senior audit managers at large audit firms in South Africa. The fi ndings of the study revealed that auditors in South Africa do perceive that analytical procedures add value to the audit and that their use enhances audit efficiency and effectiveness. Auditors in South Africa apply analytical procedures in all phases of the audit process. Factors were identified that have an effect on the use of analytical procedures: the business risk methodology; accelerating advancements in technology, and the growing use of non-financial information to assess the reasonableness of financial data.