Overview
In our comment letter, we support the Board’s efforts to modernize its standard related to substantive analytical procedures. However, we believe certain modifications and clarifications to the proposal are necessary to help auditors understand and consistently apply its principles, avoid unintended consequences and achieve the Board’s objective of improving audit quality. Among other things, we recommend that the Board remove (1) the proposed requirement that a substantive analytical procedure use an investigation threshold at or below tolerable misstatement when performed in combination with other substantive procedures and (2) the proposed requirement that certain incremental procedures be performed on external information.