how can the analytical procedure of audit support the application of corporate goverance
The analytical procedure is the evaluation of financial information by analyzing acceptable relationships between financial and non-financial data. It is a type of evidence used during an audit. This procedure indicates potential problems in the company's financial records, after which further study can be done. It is used in a financial audit to help understand business operations and identify potential areas of risk that need to be reviewed. It also includes studying the fluctuations of relationships that are inconsistent with other related information or that differ from the expected values by a large amount, and thus this increases the credibility and transparency of the financial statements, which are considered among the most important principles of corporate governance.
I have a number of research papers published about audit and about corporate governance, and about the relationship between audit and corporate governance; you may want to check them out.
Audits (external and internal) allow those engaged in corporate governance to have confidence that their policies and procedures are being followed.
Given the issues at the Star Casinos, the Board of Directors should have had better auditors -- even if they are crooks, directors need to know that "the bodies are buried deep enough". In today's world, large firms need to know that their
- Policies and procedures are being followed,
- Controls are in place and working to ensure that rogues and thieves are being winnowed out and prevented from harming the firm and/or its stakeholders,
- Processes and profits are not dependent on money laundering,
- Supply chains are reliable and do not involve modern slavery, and
- Trust is not misplaced in thieves, conartists, scoundrels, and/or people who are wantonly and excessively optimistic.
In summary: the analytical procedure of audit has little to do with the application of corporate governance -- the audit (external or internal) provides levels of assurance.
Audits are considered one of the most important necessary procedures and help clarify the accuracy of data, which contribute to supporting and consolidating governance
The appointment of an external auditors is based on the recommendations of the board of directors audit Committee. Meanwhile the board is part of corporate governance structure.
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