Statement on auditing standards, 056

              AICPA American Institute of
Certified Public Accountants
Analytical Procedures
( Supersedes Statement on Auditing Standards No. 23, AICPA, Professional
Standards, vol. 1, AU sec. 318.)
1. This S t a t e m e n t provides guidance on t h e use of analytical proce­d
u r e s a n d r e q u i r e s t h e use of analytical p r o c e d u r e s in t h e planning and
overall r e v i ew stages of all audits.
2. Analytical p r o c e d u r e s are an important part of t h e audit process
and consist of evaluations of financial information made by a study of
plausible relationships among both financial and nonfinancial data.
Analytical p r o c e d u r e s range from simple comparisons to the use of
complex models involving many relationships and elements of data.
A basic p r e m i s e underlying t h e application of analytical p r o c e d u r e s is
that p l a u s i b l e relationships among data may reasonably b e expected to
exist a n d c o n t i n u e in t h e absence of known conditions to t h e contrary.
P a r t i c u l a r conditions that can cause variations in these relation­ships
include, for example, specific unusual transactions or events,
a c c o u n t i n g c h a n g e s , business changes, r a n d om fluctuations, or
m i s s t a t e m e n t s .
3. U n d e r s t a n d i n g financial relationships is essential in planning and
e v a l u a t i n g t h e r e s u l t s of analytical p r o c e d u r e s , and generally requires
knowledge of t h e client and t h e industry or industries in which the
client o p e r a t e s . An u n d e r s t a n d i n g of t h e purposes of analytical proce­d
u r e s and the limitations of those procedures is also important.
Accordingly, t h e identification of t h e relationships and types of data
Copyright © 1988 by the
American Institute of Certified Public Accountants, Inc.
1211 Avenue of the Americas, New York, N. Y. 10036- 8775
1234567890 AudS 898
Statement on
Auditing Standards
Issued by the Auditing Standards Board
April 1988
56