Final answer:
Auditing financial instruments uses analytical procedures to analyze risks and evaluate financial assets within the market. Such analysis considers various factors important to investors and leverages auditors' expertise to validate financial statements. Analytical writing is pivotal in interpreting economic indicators and contributing to professional and academic work.
Step-by-step explanation:
Auditing Financial Instruments
When auditing financial instruments, analytical procedures are useful to analyze the risk involved in different types of financial assets. These procedures enable auditors to assess the level of risk and compare it against expected norms, which helps in identifying any anomalies or indicators of potential misstatement. For investors in the financial market, considerations include the expected return, liquidity, credit risk, and market volatility of financial instruments. Understanding these factors is crucial for making informed decisions.
During an audit, experts employ their intuition and experience, often having a preliminary idea of what the findings might be. This intuition should serve as a base for a more detailed analysis, to confirm the initial sense or identify any discrepancies that warrant a closer examination. This approach is part of a systematic review that aims to ensure the accuracy and reliability of financial statements.
Writing Analytically in Finance
Learning how to write analytically is an important skill in finance. For example, analyzing graphs of the current account balance and the merchandise trade balance requires critical thinking and the ability to interpret economic indicators. Such skills are not only essential for audits but also for creating various financial reports and analysis, which can add significant value to academic portfolios or professional endeavours.