a) Perform preliminary analytical procedures When having been provided with all the information to be collected, the auditors conduct preliminary analysis of AP to suppliers on the Balance Sheet Carry.
a) Perform preliminary analytical procedures: When having been provided with all the information to be collected, the auditors conduct preliminary analysis of AP to suppliers on the Balance Sheet Carry out analytical procedures to: Review trends, unusual fluctuations of payables over the years, changes in the number of suppliers, etc to find out the causes of fluctuations From the analysis results above, it helps the auditor to identify questionable issues and suspicious transactions, thereby iplanning ito ifocus ion ikey itransactions ithat iare iprone ito ifraud iand ierrors Analytical itechniques iinclude: ivertical ianalysis iand ihorizontal ianalysis iThe iauditor icompares ithe ibalance i of ipayables ito isuppliers ithis iyear icompared ito ithe iprevious iyear, ianalyzes ithe ichange iin ithe iproportion iof i payables ito isuppliers iover itotal ishort-term iliabilities iand itotal iassets iCompare ithis iratio iwith ithe i proportion iof ithe isame iindustry ito ibe iable ito igeneralize ithe isituation iof ithe ienterprise b) Materiality and risk assessment: i i i Materiality iassessment: During ithe iplanning istage, ithe iauditor ishould iconduct ia imateriality iassessment ito iestimate ian iacceptable ilevel iof imisstatement, idetermine ithe iscope iof ithe iaudit, iand iassess ithe iimpact iof imisstatement ion ithe ifinancial istatements iThen, idetermine ithe iamount iof ievidence ito icollect iMateriality iindicates ithe iimportance iof iaudit iinformation Materiality assessments are typically performed in two steps: Step 1: Initial estimate of materiality: The auditor makes an initial assessment of materiality, the determination of materiality is based on the professional judgment of the auditor Therefore, it is not fixed but can change during the audit process but often fluctuates within the allowable limit The initial estimate of materiality is the maximum extent to which the auditor believes that the financial statements are likely to be misstated but does not affect the