What it is
A substantive analytical procedure is only evidence if the expectation was formed independently of the recorded balance. The file must show the expectation, how precise it is, the difference accepted without investigation and what was done about differences above it.
This workbook documents each account’s expectation base and basis, calculates the expected amount, applies a threshold tied to performance materiality, and tracks the explanation, the corroboration and any unexplained amount. A second tab computes key ratios for the current and prior year with a change flag, for planning and for the overall review.
When to use it
- Documenting substantive analytical procedures on an account.
- Preliminary analytical procedures at planning and the overall review at the end.
- Training staff to write expectations before looking at the balance.
What’s inside
- Expectation grid: base, basis, expected change, threshold and difference
- Explanation, corroboration and unexplained amount columns
- Summary of differences, uncorroborated items and total unexplained
- Ratios tab: margins, days outstanding, liquidity, leverage and coverage with change flags
Standard cited
This template follows AU-C 520 / AU-C 315. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 520 explained, AU-C 315 explained.
Questions
How should the threshold be set?
It is the difference you can accept without investigation. It must be well below materiality so the procedure can detect a misstatement that matters; many firms use a fraction of performance materiality, with a smaller fraction where the analytic is the main evidence. Follow your firm’s policy.
Is management’s explanation enough?
No. Corroborate it with other evidence, such as contracts, subsequent events or inquiry of others, and document what you obtained (AU-C 520).
Can the prior year serve as the expectation?
Only after adjusting for known changes. A flat comparison with last year’s balance is weak evidence for most accounts, because it assumes nothing changed.
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- Audit Planning Memo (AU-C 300)
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Last updated 11/05/2026. All free templates.