Auditors' use and perceptions of analytical procedures in Singapore : an exploratory study

• Main Authors: Kwok, Yew Cheong, Chua, Eunice Mei Ling, Yan, Alex Chun We
• Other Authors: Premila Gowri Shankar
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Accounting
• Online Access: http://hdl.handle.net/10356/51147
• Institution: Nanyang Technological University

The use of analytical procedures as an auditing technique has had a long history, but only in recent years has it obtained the renewed interest of practitioners, academics and standard setting bodies. Much of the rise was preceded by the economic boom in the late 1970s and early 1980s (particularly in the West), technological developments and increased threats of litigation [Higson, 1991]. As businesses expand, transactions increase in both volume and complexity, forcing auditors to look for ways to reduce audit costs while maintaining high service quality. Accordingly, analytical procedures seem to be a proven way to increase the efficiency and effectiveness of the audit process [Albrecht, 1977; Smith, 1983; Blocher and Willingham, 1988; Calderon and Green, 1994]. It is not unexpected that Singapore too, may soon require a change in the way auditing is traditionally performed, given its high growth in the past decade and its conferment with the Developed Nation status on 1 January 1996. Singapore has also had its fair share of corporate collapses and litigation against auditors, such as the Pan-Electric case in 1985 and more recently, the Barings collapse in 1995. Are analytical procedures a panacea for all audit situations? The first part of this report, comprising Chapters 1 to 3, provides a review of available literature on the potential benefits of analytical procedures as well as certain considerations necessary for their use as an auditing technique. Considering the dearth of similar studies performed locally, Chapters 4 and 5 describe the methodology and findings of a questionnaire survey conducted to obtain an insight into the current use of analytical procedures by local practitioners, as well as their perceptions on related issues. . The report is concluded with a chapter on the position of the Institute of Certified Public Accountants of Singapore (ICPAS) on these issues. In an interview, the Practice Review Director of the Institute discusses significant observations from his reviews of local auditors, the role of the Institute in promoting the use of analytical procedures, and the future of analytical procedures in Singapore. It is hoped that this study will help to create greater awareness of the importance of analytical procedures as an audit technique, as well as provide a basis for future research on related issues.