Analytical Procedures, Trend Analysis
and Savings…
Can personal savings be
reviewed or, in accounting
terms, be audited? Can
analytical procedures be
applied in the accounts
related to savings?
The following are the
definitions of analytical
procedures; it consists of
evaluations of financial
information through analysis
of plausible relationships
among both financial and
non-financial data; it is
performed to compare the
expected relationships
between financial and non-
financial data in an effort to
find inconsistencies, if any;
and it may indicate possible
problems with the financial
records of the client or
individual.
One type of analytical
procedures is the tool called
trend analysis. It refers to the
comparison of a current
balance with a previous
year's balance. Trend
analysis involves the
collection of information
from multiple time periods
and plotting the information
on a horizontal line for
further review.
The intent of this analysis is
to spot actionable patterns in
the presented information.
In business, this tool is useful
in extending revenue and
expense line items into the
future for budgeting
purposes, to estimate future
results.
This article would connect
the concepts stated above to
the account of savings which
many can hopefully relate to.
But first, what are savings?
Based on a day-to-day
encounter with different
people, there are various
approaches in terms of
saving up money. Some
prefer leaving their savings
inside their drawers at home,
kept in every corner of their
cabinets and such. Others
prefer entrusting their
savings to other people, for
them not to spend it. And
others chose to entrust it to
the bank. There is no
problem with whatever way
an individual save as long as
you are saving. But, the most
advisable way is the last one
– opening an account in the
bank. Two advantages of
that way are the money is
not stagnant, which is good
in the economy and the
other is it is gaining interest
over time.
Savings account allows the
depositor to keep his/her
money in a safe place while it
earns a small interest every
month, for future purposes -
may be it defined or
uncertain purpose.
Most or maybe some college
students nowadays have
their own saving accounts
from the banks of their
choice while some accounts
were initiated by the
parents. They may have
opened the accounts since
early months of their
children to set aside money
for the future expenses for
their children such as
education.
Can it all be
related?
Now that all terms have
been define, how are those
three related?
From the above discussion,
the relationship of analytical
procedures and trend
analysis was already given.
Again, the latter is a type of
the former.
For a student, there are two
ways of computing savings; it
may be allowances - Allowances 55k
expenses = savings or Expenses 49.6k
allowances - savings = Savings 5.4k
expenses. The problem with
the first equation is that
there is a possibility not to
have any savings at all
because the mindset in here, Table # 2
as long as the allowance can 2016 2015 %
cover the expenses, spending Allowances 60k 55k 9.09%
is fine. This is the usual way Expenses 52k 49.6k 4.84%
of how students today save. Savings 8k 5.4k 48.15%
On the other hand, for the
second equation, savings are
Figure # 1
certain because it is already
80
taken aside so whatever
60
remains shall be allotted for 40 2016
expenses. There may be a 20
0 2015
fixed percentage of the
allowance that will be 2014
automatically savings. This is
the ideal way of computing it
and it really involves
discipline. The allowances include the
money given by the parents
Now, is it possible to create a to their children for various
trend analysis on savings?
For this purpose, the
expenses. It may be on a
daily, weekly or monthly
following data are estimates basis. The expenses include
of a usual second year to the transportation, food,
fourth year Filipino college school requirements and
student’s allowance, other incidental costs such as
expenses and savings. The buying gifts or ‘wants’ stuff
equation to be used is the of the student. The savings
usual one where savings then is the money set aside
depend on the spending of for future purposes.
the student. Assume that in a
school calendar, there are 5 The data above presented
days in a week, 4 weeks in a the financial changes of each
month and 10 months in a account. Now, what non-
year: financial factors affect the
Table # 1 increase or decrease of the
2015 2014 % accounts?
55k -
48k 3.33% For the allowance account,
7k (22.86%) there is no change in the
second year and third year in
college of the student. There
is neither increase nor
decrease during these years
because the expenses in this
time are not yet so but there is in the expenses.
demanding that it would In 2015 – 2016, there is an
require an increase. The increase in savings even
allowance still covered the though there is an increase
expenses enough to have a in expenses. This is so
savings. Between the third because the increase on
and fourth year, the parents expenses was covered by the
have increased the increase in the allowance.
allowance. This may be due
to the fact that more Through the use of the trend
spending is expected analysis tool, the student
because more requirements may further understand the
are to be expected as well. reasons behind the change
of the accounts, the factors
For the expenses, there is a that affect those and may be
constant increase in the influenced for future
account for the three years. financial decisions.
As a college student, it is
reasonable to have more
requirements on higher
years, especially in fourth
year, than of the lower years.
These requirements
increased the spending on
school works and materials
which include extra-
curricular activities and
academic stuff such as thesis,
projects, assignments and
more. Other variable factor
that may be included in the
spending behavior of the
student is its emotional
status. It is said that when a
student is in its peak of
emotions, whether extreme
happy or sad, the more
chance of spending.

For the savings account, the

change between the years
varies. From 2014 – 2015, it
decreased because there is
no increase in the allowance