AU-C Section 520, Analytical Procedures requires that auditors apply analytical procedures in the planning and final review stages for all audits of financial statements. In addition, it recognizes that auditors use professional judgment to determine whether analytical procedures should be employed as substantives test to collect evidential matter related to account balances or classes of transactions. Auditors develop expectations about important financial and operating relationships based on their understanding of the client's business and industry. The results of analytical procedures supporting these expectations increase the level of confidence and may lead to audit efficiencies by changing the nature, timing, and extent of audit procedures. On the other hand, results differing from expectations should increase overall skepticism, and additional audit procedures may be required to explain significant variations. Analytical procedures are so important that they are required on all audits. Upon completion of this course, the user should be able to: Describe the nature of the various analytical procedures commonly used in auditing; List the advantages and limitations of each of these procedures in differing circumstances; List the steps used in applying analytical procedures; Explain the analytical procedures that may be useful in a variety of practical auditing situations.