Abstract Analytical procedures, recommended for audits by the Auditing Standards Board in 1978, are mandated by the Exposure Draft issued February 14, 1987. A review of court decisions and U.S. Securities and Exchange Commission actions leads the authors to strongly support the mandating of analytical procedures in audit programs. Constructive use of such procedures should lead to detecting unusual relationships in the data and/or significant changes in such relationships. Then other substantive audit procedures can be adopted to enhance the likelihood of detecting materially misleading financial information. Case evidence reviewed supports the position that using analytical procedures in audit programs would aid in detecting: revenue overstatements, fictitious sales and receivables, inadequate allowances for doubtful accounts, inventory overstatements, unrecorded liabilities for purchases, and commission expense underaccruals.
Coglitore et al. (Tue,) studied this question.