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The Auditor's Guide to Analytical Procedures Under ISA 520
Complete guide: ISA 520 requirements quick reference, decision flowchart for when to use analytical procedures vs. tests of details, industry-specific ratio checklists for 12 sectors, threshold-setting guide by risk level, sample completed working paper, common quality-review findings, and documentation checklist.
Analytical Review Under NEP 520 in France
France has adopted its own national auditing standard for analytical procedures — NEP 520 Procédures analytiques — which is the French adaptation of ISA 520. The NEP (Normes d'Exercice Professionnel) framework governs all statutory audit engagements in France and is issued by the Haut Conseil du Commissariat aux Comptes (H3C) in consultation with the Compagnie Nationale des Commissaires aux Comptes (CNCC). NEP 520 requires the commissaire aux comptes to perform analytical procedures (revue analytique) as part of risk assessment, as substantive procedures where appropriate, and at the completion stage of the audit. France has a unique audit framework in several respects that directly affect how analytical procedures are performed. The role of the commissaire aux comptes is defined by the Code de Commerce (Articles L823-9 et seq.), and statutory audit is mandatory for a wide range of French entities, including sociétés anonymes, sociétés par actions simplifiées meeting certain thresholds, and associations exceeding defined criteria. The commissaire aux comptes has a broader mandate than auditors in many other jurisdictions, encompassing not only the audit of financial statements but also specific verifications required by law, such as the verification of the management report (rapport de gestion) and the review of related-party agreements (conventions réglementées). These additional responsibilities create opportunities and requirements for analytical review that extend beyond the financial statements themselves.
H3C Inspection Findings on Analytical Procedures
The H3C conducts inspections of audit firms performing statutory audits in France, with separate inspection programmes for firms auditing PIE entities (entités d'intérêt public) and those auditing non-PIE entities. The H3C's published inspection reports have identified analytical procedures as an area where improvement is needed across the French audit profession. Key findings include the following themes. The depth of analytical procedures at the planning stage is sometimes insufficient to support an effective risk assessment, with auditors performing only cursory ratio analysis without developing hypotheses about expected trends or identifying unusual relationships that warrant further investigation. At the substantive testing stage, the H3C has noted that auditors do not always develop expectations with sufficient precision, relying on general knowledge of the entity rather than building quantified expectations based on identified and documented relationships between financial and operational data. The investigation of anomalies identified through analytical procedures does not always meet the standards expected by the H3C, with auditors sometimes accepting superficial explanations from management without performing additional procedures to obtain corroborating evidence. The H3C has specifically emphasised that the revue analytique at the completion stage must be a substantive exercise that contributes to the auditor's overall conclusion, not a mechanical comparison of current and prior-year figures.
The Co-Commissariat System and Analytical Review
France's distinctive co-commissariat (joint audit) system, which requires certain PIE entities to appoint two commissaires aux comptes, creates specific considerations for analytical procedures. Under the co-commissariat framework, the two audit firms must coordinate their work, including the design and performance of analytical procedures, to ensure comprehensive coverage without duplication. The répartition des travaux (work allocation) between the two firms must be documented in a joint audit plan, and analytical procedures may be allocated to one or both firms depending on the audit approach and the complexity of the entity's operations. The co-commissariat system means that analytical procedures may benefit from two independent perspectives, but it also requires careful coordination to ensure that both firms have a consistent understanding of the entity's financial data and expected relationships. The Loi PACTE (2019) modified the co-commissariat requirements, reducing the scope of mandatory joint audit, but the system remains in place for many PIE entities. The interaction between the two audit firms in performing and evaluating analytical procedures adds a layer of complexity to the documentation and communication requirements under NEP 520.
Plan Comptable Général and French GAAP Considerations
French entities reporting under the Plan Comptable Général (PCG) — the French chart of accounts and accounting framework — present specific characteristics that auditors must consider when designing analytical procedures. The PCG prescribes a standardised account numbering system and presentation format that facilitates trend analysis and inter-period comparison but may differ significantly from IFRS presentation. Key PCG features affecting analytical review include the treatment of provisions under Articles 312-1 to 312-8 of the PCG, which may create provision-heavy balance sheets compared to IFRS; the amortisation of goodwill over its useful life (rather than the IFRS impairment-only approach); and the recognition of certain extraordinary items in the résultat exceptionnel that would be classified differently under IFRS. The régime fiscal intégré (tax consolidation regime) and the participation exemption for dividends create specific patterns in intercompany relationships that the auditor must understand when performing analytical procedures on individual and consolidated financial statements. French entities are also subject to the cotisation sur la valeur ajoutée des entreprises (CVAE) and other specific taxes that affect operating costs and profitability ratios. Auditors performing revue analytique on PCG financial statements should develop expectations that reflect these framework-specific characteristics, using data from INSEE (Institut National de la Statistique et des Études Économiques), Banque de France sector analyses, and DARES employment statistics as independent benchmarks for expectation development.
Common Inspection Findings — H3C (Haut Conseil du Commissariat aux Comptes)
The following are typical findings from H3C (Haut Conseil du Commissariat aux Comptes) inspections relating to analytical procedures:
Planning-stage analytical procedures lack sufficient depth — cursory ratio analysis performed without developing hypotheses about expected trends
Expectations at the substantive testing stage not developed with sufficient precision or quantified basis
Management explanations for significant variances accepted without performing additional corroborating procedures
Completion-stage revue analytique performed as a mechanical year-on-year comparison rather than a substantive evaluation contributing to the overall audit conclusion