Enter the amount you expected for each balance, the recorded amount, and the difference you can accept without further work. The tool shows the variance and the part that still needs an explanation.
Build each expectation from independent data, such as headcount and average pay, prior-year figures adjusted for known changes, or volumes times rates. An expectation taken from the recorded figure itself proves nothing.
The acceptable difference is a judgement. It is usually set below performance materiality and depends on the precision of the expectation and the risk. Under SA 520, differences above it need to be investigated, and the explanations corroborated. Check current standards.
A substantive analytical procedure works by forming an expectation before looking at the recorded number. The expectation should come from data that is independent of the ledger and reliable enough for the precision you need. The gap between the two is then compared with what you can accept. Anything above it needs an explanation that you can corroborate with evidence.
For each balance you enter the recorded amount and your expectation. The variance is recorded minus expected, shown in rupees and as a percentage of the expectation.
You enter the difference you can accept without further work. A balance whose variance is larger than that is marked Investigate, and the part above the threshold is shown as still to explain.
The tool does the arithmetic. Building the expectation and corroborating explanations is the real audit work.
Acceptable difference ₹5,00,000. Employee cost recorded ₹2,15,00,000 against an expectation of ₹1,98,00,000.
