What is a primary purpose for the use of analytical procedures by the internal auditor?

The primary purpose of using analytical procedures by internal auditors is to provide measurable expectations for results. Analytical procedures involve the evaluation of financial information through analyses of plausible relationships among both financial and non-financial data. By establishing expectations based on historical data, trends, and ratios, auditors can identify areas that may require further investigation when deviations from those expectations occur. This not only assists in assessing the accuracy of financial statements but also helps in gauging the overall performance and efficiency of operations.

In contrast, while discovering fraud and validating financial transactions are important aspects of an auditor’s responsibilities, they do not capture the core intent behind analytical procedures. Analytical procedures are not meant to outright replace substantive testing but rather complement it, by providing insights that guide auditors on where to focus their substantive testing efforts effectively.