The Usefulness of Analytical Procedures - An Empirical Approach in the Auditing Sector in Portugal

Carlos Pinho

Abstract


The conceptual conflict between the efficiency and efficacy on financial auditing arises from the fact that resources are scarce, both in terms of the time available to carry out the audit and the quality and timeliness of the information available to the external auditor.

Audits tend to be more efficient, the lower the combination of inherent risk and control risk is assessed to be, allowing the auditor to carry out less extensive and less timely auditing tests, meaning that in some cases analytical audit procedures are a good tool to support the opinions formed by the auditor.

This research, by means of an empirical study of financial auditing in Portugal, aims to evaluate the extent to which analytical procedures are used during a financial audit engagement in Portugal, throughout the different phases involved in auditing.

The conclusions point to the fact that, in general terms and regardless of the size of the audit company and the way in which professionals work, Portuguese auditors use analytical procedures more frequently during the planning phase rather than during the phase of evidence gathering and the phase of opinion formation.


Keywords


Analytical Procedures, Financial Statements, Auditing, Risk Approach

Full Text:

PDF

References


Albrecht, W. (1977). Towards Better and More Efficient Audits. Journal of Accountancy, December, pp. 48-50.

Amacher, R., Ulbrich, H. (1992). Principles of Economics, Fifth Edition. Cincinnati, OH: South-Western Publishing Company.

Ameen, E., Strawser, J. (1994). Investigating the use of analytical procedures: an update and extension; Auditing: A Journal of Practice & Theory, 13, pp. 69–76.

Anderson, J., Jennings, M., Kaplan, S., Reckers, P. (1995). The effects of using diagnostic decision aids for analytical procedures on judges’ liability judgments. Journal of Accounting and Public Policy, 14 (1), pp. 33–65.

Apostolou, B., Pasewark, W., Strawser, J. (1993). The effects of senior internal auditor behaviour on staff performance and satisfaction. Journal of Business Research, 23, pp. 110–122.

Arens, A., (2006), Auditing and Assurance Services – An Integrated Approach, 11th, pp. 208-216, Prentice Hall, New Jersey.

Baumol, W.J. and Blinder, A.S. (1994); Economics: Principles and Policy. Fort Worth, TX: The Dryden Press.

Barros, C. (2006). Dependência entre risco inerente e risco de controlo. (Dependency between inherent risk and control risk) Revisores e Empresas (April / June 2006).

Bernardi, R.A. (1993) Fraud detection: the effect of client integrity and competence and auditor cognitive style. Auditing: A Journal of Practice and Theory, 13 (Supplement), pp. 68–84.

Biggs, S., Mock, T.J. & Watkins, P.J. (1989). Analytical review procedures and process in auditing, Research Monograph No. 13, The Canadian Certified General Accountants’ Research Foundation.

Blocher, E., Willingham, J. (1988); Analytical Review: A Guide to Analytical Procedures, (2nd ed.), New York: Prentice Hall.

Blocher, E. (2002). Updating analytical procedures. The CPA Journal. New York.

Blocher, E. Loebbecke, J. (1992). Research in analytical procedures: implications for establishing and implementing auditing standards, AICPA, Auditing Standards Board Expectation Gap Roundtable.

Calderon, T.G. and Green, B.P. (1994). Signaling fraud by using analytical procedures. Ohio CPA Journal, 53, April, pp. 27-38.

Coakley, J.R. (1982). Analytical review: A comparison of procedure and techniques used in auditing, Ph.D dissertation, University of Utah.

Cohen, J. (1994). Further evidence of auditors’ asymmetric reactions to analytical review results. Advances in Accounting, 12, pp. 167–185.

Costa, A. (2007). A Importância Crescente dos Procedimentos Analíticos em Auditoria (The Growing Importance of Analytical Audit Procedures); Revisores e Empresas; Jul/Sep 2007.

Cushing, B., Graham, L., Jr., Palmrose, Z., Roussey, R., Solomon, I (1995); Risk Orientation, In Auditing Practice, Research and Education: A Productive Collaboration, edited by Bell, T. B. E Wright, A. M., AICPA, New York: 11-54.

Davis, J.S. and Solomon, I. (1989); Experience, expertise and expert-performance research in public accounting. Journal of Accounting Literature, 8, pp. 150–164.

Deshmukh, A., Karim, K., Siegel, P. (1998). An analysis of efficiency of auditing to detect management fraud: a signal detection theory approach. International Journal of Auditing, July, pp. 127–138.

Fischer, M.J. (1996). Realizing the benefits of new technologies as a source of audit evidence: an interpretive field study. Accounting, Organizations and Society, 21, pp. 219–242.

Fraser, I., Hatherly, D., Lin, K., (1997). An empirical investigation of the use of analytical review by external auditors. The British Accounting Review (March); pp 35–47.

Glover, S.; Prawitt, D.; Wilks T. (2007); Why do Auditors Over Rely on Weak Analytical Procedures? The Role of Outcome and Insensitivity to Precision. School of Accountancy and Information Systems, Brigham Young University, Utah.

Graham, L. (1985). Audit Risk - Part II”, The CPA Journal, 55 (September): pp 34-40.

Hollingshead, R.T. (1996). Discussion of an empirical test of Bentham’s theory of the persuasiveness of evidence. Auditing: A Journal of Practice and Theory, 15 (Supplement); pp. 33–36.

Houck, T. P. (2003), Why and How Audits Must Change- Practical Guidance to Improve Your Audits, John Wiley & Sons, Inc. – New Jersey.

Libby, R. (1995); The role of knowledge and memory in audit judgment. In Judgment and Decision-Making Research in Accounting and Auditing, edited by R.H. Ashton and A.H. Ashton, Cambridge, UK: Cambridge University Press, pp. 176–206.

Lin, K., Fraser, I. (2003). The use of analytical procedures by external auditors in Canada; Journal of International Accounting, Auditing & Taxation 12, pp. 153–168.

Loebbecke, J.K. & Steinbart, P.J. (1987). An investigation of the use of preliminary analytical review to provide substantive audit evidence, Auditing: A Journal of Practice & Theory, 5, Spring, pp. 74–88.

Mahathevan, P. (1999); Auditors' Use and Perception of Analytical Procedures: Evidence from Singapore; International Journal of Auditing 1(3), pp 225 – 239.

McDaniel, L.S. (1990); The effects of time pressure and audit program structure on audit performance; Journal of Accounting Research, 28, pp. 267–285.

Messier, W., Austen, L. (2000). Inherent Risk and Control Risk Assessments: Evidence on the Effect of Pervasive and Specific Risk Factors. Auditing: A Journal of Practice & Theory, (Fall, vol. 19, No. 2), pp 119-131.

Messier, W., (1995). Research in and development of audit-decision aids. In Judgment and Decision-Making Research in Accounting and Auditing; Cambridge University Press, pp. 207–228.

Mulligan, C., Inkster, N. (1999). The use of analytical procedures in the United Kingdom. International Journal of Auditing, 3, pp 107–120.

Pincus, K. (1990). Auditor individual differences and fairness of presentation judgments. Auditing: A Journal of Practice and Theory, 9(3), pp. 150–166.

Pincus, K., Bernardi, R., Ludwig, S., (1999). Audit Effectiveness Versus Audit Efficiency: Are The Two in Conflict? International Journal of Auditing 3: pp. 121–133.

Reis, E.; Melo, P.; Andrade, R.; Calapez, T. (2007) – Estatística Aplicada (Applied Statistics) Vol. 2; Edições Sílabo.

Sullivan, J., Gnospelius, R., Defliese, P., Jaenicke, H. (1985). Montgomery’s Auditing, Tenth Edition. New York: John Wiley & Sons.

Tabor, R.H. and Willis, J.T. (1985). (1985). Empirical evidence on the changing role of analytical review procedures. Auditing: A Journal of Practice and Theory, 4, pp. 93–109.

Taylor, D., Glezen, G. (1994). Auditing: Integrated Concepts and Procedures, Sixth Edition New York: John Wiley & Sons.




DOI: http://dx.doi.org/10.18533/ijbsr.v4i8.578

Refbacks





Copyright (c)

 ...........................................................................................................................

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

............................................................................................................................

If you find difficulties in submitting manuscript please forward your doc file to support@thejournalofbusiness.org. Our support team will assist you in submission process and other technical matters.

In order to get notifications on inbox please add  this domain thejournalofbusiness.org in your email safe list.

International journal of business and social research (Print)
ISSN 2164-2540

International journal of business and social research (Online)
ISSN 2164-2559

[International Journal of Business and Social Research (IJBSR) previously published by MIR Center for Socio-Economic Research, MD, USA. From February 2018 this journal is published by the LAR Center Press, OR, USA]