Analytical procedures important for auditor to determine potential risks and problem areas in the business. Analytics can provide a source of inexpensive evidence and detailed testing. First time they have conducted a full audit, they usually only perform an audit for purpose of bank loans. Company is planning to do an ipo and has hired auditor to prepare f/s for ipo. Medium sized company that buys copper rod and plastic materials to make copper wiring. Has a good reputation for quality products and good working relationship with outside accountants. Production area divided into three areas: residential products, special-order products. Raw materials inventory stored in a single location and divided into copper and plastics. Finished goods are stored in large stackable spools. Copper rod inventory stored on pallets which are not stackable. Consider places where there are unusual transactions and events.