Consider changes to an auditor’s use of substantive analytical procedures to better align with the auditor’s risk assessment and to address the increasing use of technology tools in performing these procedures, including whether to revise AS 2305, Substantive Analytical Procedures.  


Most Recent Action

On June 12, 2024, the Board voted to issue for public comment a proposal for a new standard, AS 2305, Designing and Performing Substantive Analytical Procedures, and amendments to other PCAOB standards. The proposal would replace and retitle the Board’s existing standard related to substantive analytical procedures, AS 2305, Substantive Analytical Procedures. The comment period is open through August 12, 2024. 

In brief, the Board’s proposal would: 

  • Strengthen and clarify the requirements for determining whether the relationship(s) to be used in the substantive analytical procedure is sufficiently plausible and predictable;
  • Specify that the auditor may not develop their expectation using the company’s amount or information that is based on the company’s amount (so-called circular auditing);
  • Strengthen and clarify existing requirements for determining when the difference between the auditor’s expectation and the company’s amount requires further evaluation;
  • Strengthen and clarify existing requirements for evaluating the difference and determining if a misstatement exists, including specifying requirements in certain situations the auditor may encounter when evaluating a difference
  • Clarify the factors that affect the persuasiveness of audit evidence obtained from a substantive analytical procedure;
  • Clarify the elements of a substantive analytical procedure, including the distinction between substantive analytical procedures and other types of analytical procedures;
  • Modernize the standard by reorganizing the requirements and more explicitly integrating the standard with other Board-issued standards;
  • Specify the type of audit evidence necessary when applying substantive procedures to accounts or disclosures that depend on information received by the company from external sources in AS 2301, The Auditor’s Responses to the Risks of Material Misstatement; and
  • Clarify the description of analytical procedures, including substantive analytical procedures as well as other types of analytical procedures in PCAOB standards in AS 1105, Audit Evidence.

Additional information on the proposal:



Existing AS 2305 establishes the requirements regarding the use of substantive analytical procedures in an audit of financial statements. It was originally developed by the American Institute of Certified Public Accountants (“AICPA”), adopted on an interim basis by the Board in 2003, and remains in effect substantially as adopted. The existing standard predates the advancements in technology and greater availability of information that we understand are influencing current practice, as well as advancements in other PCAOB standards, such as requirements regarding risk assessment (AS 2301) and audit evidence (AS 1105).  

The project has been informed by observations from the Board’s oversight activities, audit firms’ methodologies, available academic research, discussions with the Board’s advisory groups, the activities of other standard setters and regulators, and information from investors and other stakeholders.



The Board issued a proposal for public comment on June 12, 2024.