Analytical Procedures: Basic Comparison Types 

Roger Philipp, CPA, CGMA, goes over Analytical Procedures - Basic Comparison Types in this lecture. In addition, learn a new mnemonic, "CRAFT", which will help you retain information about a couple different comparisons you can do when looking at a ratio analysis. Learn more about this topic that is covered in the Auditing (AUD) section of the CPA Exam.
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Transcript Sneak Peek:
Okay let's talk about Analytical Procedures. Now, with Analytical Procedures, remember over here we said Audit Procedures, two types, test of details of accounts, transactions, balances and disclosures, and Analytical Procedures, that's what we're looking at now. Now what are Analytical Procedures? That's part of your ICORRIIA, Analytical Procedures are the study of data comparisons and relationships. How informations compare or relate, relationships.
This is based on the anticipation or expectation theory. This deals with ratios, ratio analysis. So what we're looking at is how does the number compare, how does it relate, based on the expectation. What did you get, versus what did you expect to get. That tells us that you know what? This account may have changed by more or less than we expected. So we're gonna do this at the beginning of the audit, we're gonna do this at the end of the audit, because at the beginning, we're gonna look at all the client's transactions. So for example, here's let's say X1, here's X2, dollar change, percentage change.