CA Saurabh is conducting the statutory audit of UVW Ltd. for the year 2024-25. While verifying the purchases made by the company, he decided to…

CA Saurabh should perform following analytical procedures to obtain audit evidence as to overall reasonableness of purchase quantity and price: Consumption Analysis: Auditor should scrutinize raw material consumed as per manufacturing account and compare the same with previous years with closing stock and ask for the reasons from the management if any significant variations are found.Stock Composition Analysis: Auditor should collect the reports from management for composition of stock i.e. raw materials as a percentage of total stock and compare the same with previous year and ask for reasons from management in case of significant variations.Ratios: Auditor should compare the creditors' turnover ratios and stock turnover ratios of the current year with previous years. Auditor should review quantitative reconciliation of closing stocks with opening stock, purchases and consumption.