Analytical procedures for Income Statement Accounts:
Analytical procedures can be a powerful audit tool in obtaining audit evidence about income statement balances. It is a type of evidence used during an audit. These procedures can indicate possible problems with the financial records of a client, which can then be investigated more thoroughly. An income statement audit can assist you separate arithmetical errors and ledger discrepancies or give you peace of mind before you file the income statement during closing.
Account Analytical Procedure –
Account: Hotel room revenue.
Analytical Procedure: Number of rooms x Occupancy rate x Average room-rate.
Account: Tuition revenue.
Analytical Procedure: Number of equivalent full-time student x Tuition rate for a full-time student.
Account: Wages expense.
Analytical Procedure: Average number of employees per pay period x Average pay per Period x Number of pay periods.
Account: Gasoline Expense.
Analytical Procedure: Number of miles driven + (Average miles per gallon x Average per expense Gallon cost).