Wiley Practitioner's Guide to GAAS 2023, 2nd Edition

19AU-C 520 Analytical Procedures

• Scope
• Definition of Term
• Objectives of AU-C 520
• Overview
  • How to Use Analytical Procedures
• Requirements
  • Analytical Procedures
  • Common-Size Financial Statements
  • Substantive Tests
  • Overall Review
  • Documentation
  • Permanent File for Analytical Procedures
• AU-C 520 Illustrations

SCOPE

AU-C 520 provides guidance on using analytical procedures as substantive procedures and at the end of the audit.

AU-C 315 addresses the use of analytical procedures in risk assessment when planning the audit, and AU-C 330 addresses the nature, timing, and extent of procedures in response to assessed risk. Those procedures may include substantive analytical procedures. (AU-C 520.01)

DEFINITION OF TERM

Source: AU-C 520.04. For the definition related to this standard, see Appendix A, “Definitions of Terms”: Analytical procedures.

OBJECTIVES OF AU-C 520

The objectives of the auditor are to:

1. obtain relevant and reliable audit evidence when using substantive analytical procedures and
2. 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.

(AU-C Section 520.03)

OVERVIEW

HOW TO USE ANALYTICAL PROCEDURES

As Substantive Procedures

The auditor may, but is not required to, use analytical procedures as a substantive test. When used as a substantive test, the objective of analytical procedures is ...