Expecting Before Inspecting

Have you ever reviewed audit planning analytics and thought, “this work paper has no meaning – it is just rows of numbers side-by-side with no explanations or expectations.”

Expectations and Planning Analytics

The purpose of planning analytics is to identify potential risk so that appropriate audit responses can be planned. But before you can look for risk, you should first ask, “what do I expect to see?”


You are developing context prior to seeing content. You are expecting before inspecting.

But where do my expectations come from?

Your expectations are informed by your prior knowledge of the client and conversations you’ve had with management. If you’ve had no conversation with management, then consider doing so before you develop your expectations.

Peer Review Finding

One common peer review finding is that auditors don’t document their analytic expectations prior to creating planning analytics.

You need not document an expectation for every balance or ratio; simply document your expectations about significant areas. An example follows:

I expect debt to increase by approximately $1 million due to current year borrowings to expand the central-store building. I expect buildings to increase by $500,000 since the related construction project is 50% complete at year-end.

Once you complete the comparative analytics, reference the accounts to the expectation memo. For example, you would reference your comparison of this year’s debt with last year’s debt to the expectation memo. Your analytics should agree with the expectations; another common peer review finding is the planning analytic, once created, are not compared to expectations.

The process is as follows:

  1. Document expectations
  2. Create analytics
  3. Compare analytics to expectations

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