Guide to Audit Data Analytics by AICPA;

Author:AICPA; [AICPA]
Language: eng
Format: epub, pdf
ISBN: 9781945498657
Publisher: John Wiley & Sons, Incorporated
Published: 2017-11-20T00:00:00+00:00

For example, expectations developed for income statement accounts tend to be more precise than expectations for balance sheet accounts because income statement relationships generally are more predictable because they occur over a period of time, rather than at a point in time. Also, expectations formed under stable economic conditions (for example, stable interest rates) or stable environmental factors (for example, no regulatory changes) tend to be more precise than expectations formed in an unstable economy or environment.

3.15 Numerous factors affect the amount of an account balance. Increasing the number of such factors considered in forming an expectation of the account balance may increase the precision of the expectation. Such factors include the following:

Significant events

Accounting changes

Business and industry factors

Market and economic factors

Management incentives

Initial versus a repeat engagement

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