Which option best describes the use of analytical procedures in planning, given that they can be used as a primary means of obtaining assurance for some assertions?

Which option best describes the use of analytical procedures in planning, given that they can be used as a primary means of obtaining assurance for some assertions?

• A. Analytical procedures should be omitted for most audits
• B. Analytical procedures can be used as a primary means of obtaining assurance for some assertions
• C. Analytical procedures are never effective for detecting misstatements
• D. Analytical procedures used in planning cannot use nonfinancial information

Answer: (B)

Analytical procedures in planning help you understand the business and spot unusual patterns or risks by comparing expected and actual relationships in financial and nonfinancial data. They’re not just a planning checklist; when the relationships are stable and the data are reliable, these procedures can provide substantive evidence themselves, serving as the primary means of obtaining assurance for certain assertions. For example, if revenue typically tracks with volume and seasonality in a predictable way, and those patterns hold, analytical procedures can offer strong evidence about revenue assertions without needing extensive detail testing. They can also incorporate nonfinancial information—like production levels, headcount, or market indicators—to form reasonable expectations. So, the best description is that analytical procedures can be used as a primary means of obtaining assurance for some assertions.

Analytical procedures in planning help you understand the business and spot unusual patterns or risks by comparing expected and actual relationships in financial and nonfinancial data. They’re not just a planning checklist; when the relationships are stable and the data are reliable, these procedures can provide substantive evidence themselves, serving as the primary means of obtaining assurance for certain assertions.

For example, if revenue typically tracks with volume and seasonality in a predictable way, and those patterns hold, analytical procedures can offer strong evidence about revenue assertions without needing extensive detail testing. They can also incorporate nonfinancial information—like production levels, headcount, or market indicators—to form reasonable expectations.

So, the best description is that analytical procedures can be used as a primary means of obtaining assurance for some assertions.