Statement on Auditing Standards - Analytical Procedures (Redrafted)
Statement on Auditing Standards (SAS) Analytical Procedures (Redrafted) supersedes SAS No. 56, Analytical Procedures (AICPA, Professional Standards, vol. 1, AU sec. 329).
CONTENTS Introduction Scope of This Statement on Auditing Standards/1 Effective Date/2 Objectives/3 Definition/4 Requirements Substantive Analytical Procedures/5 Analytical Procedures That Assist When Forming an Overall Conclusion/6 Investigating Results of Analytical Procedures/7 Documentation/8 Application and Other Explanatory Material Objectives/A1 Definition of Analytical Procedures/A2-A6 Substantive Analytical Procedures/A7-A24 Analytical Procedures That Assist When Forming an Overall Conclusion/A25-A27 Investigating Results of Analytical Procedures/A28-A29 Documentation/A30
Exhibit A: Comparison of Statement on Auditing Standards Analytical Procedures (Redrafted) With International Standard on Auditing 520, Analytical Procedures/A31
Scope of This Statement on Auditing Standards
1. This Statement on Auditing Standards (SAS) addresses the auditor's use of analytical procedures as substantive procedures (substantive analytical procedures). It also addresses the auditor's responsibility to perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion on the financial statements. The clarified SAS Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Redrafted) (1) addresses the use of analytical procedures as risk assessment procedures (which may be referred to as analytical procedures used to plan the audit). The clarified SAS Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained (Redrafted) addresses the nature, timing, and extent of audit procedures in response to assessed risks; these audit procedures may include substantive analytical procedures. (2)
2. This SAS is effective for audits of financial statements for periods ending on or after December 15, 2012.
3. The objectives of the auditor are
a. to obtain relevant and reliable audit evidence when using substantive analytical procedures and
b. to design and perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion about whether the financial statements are consistent with the auditor's understanding of the entity (Ref: par. A1)
4. For the purposes of generally accepted auditing standards, the term analytical procedures means evaluations of financial information through analysis of plausible relationships among both financial and nonfinancial data. Analytical procedures also encompass such investigation, as is necessary, of identified fluctuations or relationships that are inconsistent with other relevant information or that differ from expected values by a significant amount. (Ref: par. A2-A6)
Substantive Analytical Procedures
5. When designing and performing analytical procedures, either alone or in combination with tests of details, as substantive procedures in accordance with the clarified SAS Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained (Redrafted), (3) the auditor should (Ref: par. A7-A9)
a. determine the suitability of particular substantive analytical procedures for given assertions, taking into account the assessed risks of material misstatement and tests of details, if any, for these assertions; (Ref: par. A10-A16)
b. evaluate the reliability of data from which the auditor's expectation of recorded amounts or ratios is developed, taking into account the source, comparability, and nature and relevance of information available and controls over preparation; (Ref: par. A17-A20)