Analytical procedures can be used as planning tools and as substantive tests.

• A. Planning the audit approach, assessing risk, and understanding the entity.
• B. Replacing all substantive testing.
• C. Only for bank reconciliations.
• D. Only when computer-assisted tools are unavailable.

Answer: (A)

Analytical procedures are used early to shape the audit approach and to understanding the entity by highlighting unusual relationships and trends that indicate where risks are higher. This planning use helps auditors decide where to focus testing and how to assess overall risk. In this sense, the option that mentions planning the audit approach, assessing risk, and understanding the entity best captures how analytical procedures are applied in the planning phase.

Analytical procedures can also serve as substantive tests when appropriate, by comparing expected balances derived from plausible relationships with what is actually recorded. However, they are not meant to replace all substantive testing, and their effectiveness depends on the account and the quality of the expectations.

The other statements are not correct because analytical procedures apply beyond bank reconciliations, do not replace all substantive testing, and do not depend on computer-assisted tools being unavailable.