February 9, 2005 -- SAS 56 requires that analytical procedures be utilized in the planning and overall review stages of an audit. During the planning phase of an audit, analytical procedures are used to assist the auditor in determining the nature, timing, planning and extent of auditing procedures that will be used to obtain evidential matter for specific account balances or classes of transactions. One often-used analytical approach is a fluctuation analysis comparing the current and prior years and obtaining explanations for significant variances. Although this may be sufficient for some engagements, planning the audit of more complex client situations may require more extensive analysis or the use of non-financial data including client operating data. 

In addition, the results of the planning analytical procedures performed are to be compared to predetermined expectations developed by the auditor. These expectations are developed by identifying and using plausible relationships that are reasonably expected to exist based on the auditor’s understanding of the client and the industry in which the client operates.  High-quality analytical procedures during the planning phase of the audit will improve the effectiveness and efficiency of the overall audit process.

For more information, contact an Asher professional at 215-564-1900 .

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