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Analytical procedures in auditing – meaning.

The analytical procedure is a comparison of financial statements amounts with an auditor’s expectations.
An example is to compare actual interest expenses for the year(a financial statement amount) with an estimate of what that Interest expense would be.

The estimate can be found by multiplying a reasonable interest rate times the leverage balance of interest bearing debt outstanding during the year[ the auditor’s expectations]. If the actual interest expense differs significantly from the expectations, the auditor explains the difference in audit documentation.

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