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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Completion and final review

During the completion phase of the audit of Brindle Co, the audit senior performs analytical procedures on the draft financial statements as required by ISA 520. What is the main purpose of these final analytical procedures?

The purpose of final analytical procedures is to help the auditor form an overall conclusion that the financial statements are consistent with their understanding of the entity. They are a closing check on reasonableness, not a way of testing individual transactions or setting planning materiality.

  1. ATo obtain sufficient appropriate evidence on the occurrence of individual transactions
  2. BTo assist the auditor in forming an overall conclusion on whether the financial statements are consistent with the auditor's understanding of the entityCorrect
  3. CTo determine the level of performance materiality for the audit
  4. DTo identify the risks of material misstatement that will drive the audit plan

Explanation

ISA 520 requires analytical procedures near the end of the audit to help form an overall conclusion that the financial statements are consistent with the auditor's understanding of the entity. They are not a substitute for detailed testing of transactions. Setting performance materiality and identifying risks are planning matters, not the purpose of the final review.

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