Analytical procedures have become increasingly important to audit firms and are now considered to be an integral part of the audit process. The importance of analytical procedures is demonstrated by the fact that the Auditing Standards Board, the board that establishes the standards for conducting financial statement audits, has required that analytical procedures be performed during all audits of financial statements. The Auditing Standards Board did so through the issuance of Statement on Auditing Standards (SAS) No. 56 in 1988, which requires that analytical procedures be used by auditors as they plan the audit and also in the final review of the financial statements. In addition, SAS No. 56 encourages auditors to use analytical procedures as one of the procedures they use to gather evidence related to account balances (referred to in auditing as a substantive test). The purpose of this article is to provide the reader with a...