Analytical procedures are one of many financial audit

Financial audit

A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...

 processes which help an auditor understand the client's business and changes in the business, and to identify potential risk

Risk

Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...

 areas to plan other audit procedures.

Analytical procedures include comparison of financial information (data in financial statement

Financial statement

A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...

) with

1. prior periods
2. budget
   Budget
   A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
   
   s
3. forecast
   Forecasting
   Forecasting is the process of making statements about events whose actual outcomes have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term...
   
   s
4. similar industries and so on.

It also includes consideration of predictable relationships, such as:

1. gross profit
   Gross profit
   In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments...
   
    to sales
   Sales
   A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
   
   ,
2. payroll
   Payroll
   In a company, payroll is the sum of all financial records of salaries for an employee, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. Payroll plays a major role in a company for several reasons...
   
    costs to employees,
3. financial information and non-financial information, for examples the CEO's reports and the industry news.

possible sources of information about the client include:

1. interim financial information
2. Budget
   Budget
   A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
   
   s
3. Management accounts
4. Non-Financial information
5. Bank
   Bank
   A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
   
    and cash
   Cash
   In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...
   
    records
6. VAT
   Vat
   Vat or VAT may refer to:* A type of container such as a barrel, storage tank, or tub, often constructed of welded sheet stainless steel, and used for holding, storing, and processing liquids such as milk, wine, and beer...
   
    returns
7. Board minutes
8. Discussion or correspondence with the client at they year-end