Auditing and Ethics · Completion and Review

Analytical Procedures at Overall Review Stage (SA 520)

Updated 4 October 2026 · Fact-checked

Near the end of the audit, SA 520 requires you to apply analytical procedures to the financial statements as a whole. You compare figures, ratios and trends with what you know about the entity. If the results conflict with that understanding, you investigate and reassess risks and evidence before concluding.

Understand Analytical Procedures at Overall Review Stage (SA 520)

Analytical procedures are evaluations of financial information through analysis of plausible relationships among financial and non-financial data. They include comparing figures with prior periods, budgets or industry data, and investigating fluctuations that look unusual. SA 520 deals with their use as substantive procedures and in the overall review near the end of the audit.

Analytical procedures are used at three stages. At risk assessment, they help you spot areas of possible misstatement. During substantive testing, they can serve as the audit procedure itself. At the overall review stage, they help you form a final conclusion. SA 315 requires them at risk assessment and SA 520 requires them at the overall review; their use as substantive procedures is optional.

The overall review is a reasonableness check. By now you have tested many balances. You step back and ask: do the financial statements, taken as a whole, make sense given what I know about this business? You compare revenue, margins, working capital ratios, expense trends and cash flows with your understanding of the entity and with your earlier expectations.

The purpose is to find what testing may have missed. A previously unnoticed relationship or an unexpected result may point to a risk of material misstatement that you did not identify earlier. If so, you must revisit your risk assessment and, where needed, change the planned audit procedures.

The overall review is not a substitute for detailed testing. It is a final check on the picture as a whole. You still need to document the procedures performed and the conclusion reached.

Key rules to remember

Overall review requirement: Near the end of the audit, design and perform analytical procedures that help form an overall conclusion on whether the financial statements are consistent with your understanding of the entity; This is mandatory under SA 520. It applies to every audit, not only where you have doubts.
Stages of use: Stages: Risk assessment (SA 315); Substantive procedures (SA 330/SA 520, optional); Overall review (SA 520); Analytical procedures are required at risk assessment (SA 315) and at the overall review (SA 520). Using them as substantive procedures is optional and depends on the auditor's judgement.
Response to unusual results: Inconsistent or unexpected relationship → inquire of management → obtain evidence → perform other audit procedures as needed; Management's explanation alone is not enough. Corroborate it with audit evidence.
Reassessment trigger: Unexpected result at review → reconsider risk assessment → modify planned procedures if needed; Reviewing may reveal a risk of material misstatement you missed earlier.

How to solve Analytical Procedures at Overall Review Stage (SA 520) questions

Use this method for any question on analytical procedures in the overall review. It keeps your answer structured and gets step marks.

1State the stage: say the procedures are performed near the end of the audit, as required by SA 520.
2State the purpose: to form an overall conclusion on whether the financial statements are consistent with your understanding of the entity.
3Describe what you compare: current figures with prior years, budgets, industry data and expectations, using ratios, trends and non-financial data.
4Identify any unusual or unexpected relationships in the facts given.
5Explain the response: inquire of management, obtain corroborating audit evidence and perform further procedures.
6State the effect: reassess the risk of material misstatement and modify procedures if a new risk is found.
7Conclude and mention documentation of the procedures and the conclusion.

Quickest way: Purpose, compare, investigate, conclude

When to use it: Use this when time is short, for both MCQs and written answers.

MCQs: if an option says the overall review is optional, only for large entities, or replaces substantive testing, eliminate it. It is required and does not replace testing.
MCQs: look for the words 'near the end' and 'overall conclusion' to spot the correct option.
Written answers: use four short headings in your mind: Purpose, Compare, Investigate, Conclude.
Write one or two lines for each, then link to reassessing risk if something unusual appears.
If the question gives figures, state the unusual item first, then the action you would take.

Common mistakes in Analytical Procedures at Overall Review Stage (SA 520)

Saying the overall review is optional.
Students mix it up with substantive analytical procedures, which are a choice.
Fix: Remember that analytical procedures at risk assessment and at the overall review are required. Only their use as substantive tests is a choice.
Treating the overall review as a replacement for detailed testing.
Students think a reasonable-looking set of ratios is enough evidence.
Fix: State that it is a final reasonableness check on the statements as a whole and does not replace evidence from tests.
Accepting management's explanation for a fluctuation without further evidence.
Students assume an answer from management ends the matter.
Fix: Write that you inquire of management and then obtain appropriate audit evidence to corroborate the explanation.
Forgetting to reassess the risk of material misstatement.
Students stop at investigating the item and ignore the wider impact.
Fix: Add that unexpected results may reveal a new risk, so you reconsider the risk assessment and modify planned procedures.
Mixing up the three stages of analytical procedures.
The same technique is used at each stage, so the purposes blur.
Fix: Link each stage to its aim: risk assessment to identify risks, substantive to gather evidence, overall review to form a final conclusion.

Worked examples

Example 1

Explain why an auditor performs analytical procedures at the overall review stage and what the auditor does if the results are inconsistent with other relevant information.

Show the solution

Provision: SA 520 requires analytical procedures near the end of the audit that help form an overall conclusion on whether the financial statements are consistent with the auditor's understanding of the entity.
Purpose: it is a final reasonableness check on the statements as a whole. It may reveal risks not noticed earlier.
If results are inconsistent or deviate significantly from expected values, the auditor inquires of management.
The auditor then obtains appropriate audit evidence relevant to the explanations and performs other audit procedures as necessary.
The auditor also reconsiders the assessed risks of material misstatement and modifies planned procedures if needed.

Answer: The overall review is required near the end of the audit to conclude whether the financial statements agree with the auditor's understanding of the entity. Inconsistent results lead to inquiry, corroborating evidence, further procedures and reassessment of risk.

Example 2

During the final review of a trading company, the auditor finds that sales rose sharply over the previous year while trade receivables and the gross profit margin stayed almost unchanged. The auditor expected receivables to rise with sales. What should the auditor do?

Show the solution

Identify the issue: the relationship between sales and receivables differs from what the auditor expected from knowledge of the entity.
Inquire of management for the reasons, such as a shift to cash sales or faster collections.
Obtain evidence for the explanation, for example sales mix records, cash receipts after year end and credit terms.
Perform further procedures if needed, such as testing cut-off and a sample of sales and receipts to check that revenue is recorded properly.
Reconsider the risk of material misstatement for revenue and receivables, and modify procedures if a new risk is found.
Document the analysis, the explanations and evidence obtained, and the conclusion.

Answer: The auditor should investigate the unexpected relationship by inquiring of management, corroborating the explanation with evidence, performing further procedures such as cut-off and receipts testing, reassessing risk, and documenting the conclusion.

Exam tips

Tie your answer to the words 'near the end of the audit' and 'overall conclusion'. These are the key phrases examiners look for.
For questions that compare the three stages, write a three-line contrast: identify risks, obtain evidence, form a final conclusion.
In case studies, always add the follow-up: inquire, corroborate, reassess risk. Do not stop at spotting the fluctuation.
In MCQs, reject options that make the overall review optional or that call it a replacement for substantive procedures.

Practice questions from Completion and Review

Analytical Procedures at Overall Review Stage (SA 520) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Analytical Procedures at Overall Review Stage (SA 520): frequently asked questions

Is the overall review under SA 520 mandatory?

Yes. The auditor must design and perform analytical procedures near the end of the audit to help form an overall conclusion. It applies to every audit.

How is the overall review different from analytical procedures at risk assessment?

At risk assessment, you use them early to identify areas of possible misstatement. At the overall review, you use them near the end to check whether the financial statements as a whole agree with your understanding of the entity.

What if the overall review shows an unexpected result?

Inquire of management and obtain evidence to support the explanation. Perform other procedures as needed and reconsider your risk assessment. Modify planned procedures if a new risk emerges.

Can analytical procedures alone give enough evidence at the final stage?

No. The overall review is a reasonableness check on the whole. It supports your conclusion but does not replace evidence from detailed testing.