confirmations are direct, independent verification of exactly what the client has on their records. there's no judgement, estimation, expectation (except for sampling issues).
analytical procedures are “tests of reasonableness,” they study relationships in data. auditors develop expectations and compare what the client has to that expectation. the expectation may require judgement and estimation, you're comparing the expectation to what the client has on their books, determining if the difference is “reasonable” or not may require further judgment. I mean, say you develop an inventory turnover ratio based on industry averages and the client's is off by a few points. is that because they move inventory quicker than average? or is it a potential issue?
the benefits of analytical procedures is that they're cheap and efficient in identifying potential misstatements, which is why they are required in planning and review stages. they're great at idenfitying potential problem areas, but throughout the AL you will see reference to “further investigation” that may be needed, as once the AP identifies a potential misstatement it's more of a “hey, look here for misstatements” than “this is concrete proof that there is a misstatement”
but confirmation is a much more direct verification, therefore much better evidence. if the confirmation comes back and they say the balance isn't right, they made a payment 2 weeks ago, you find the proof of that payment and there you go, you've just found pretty solid proof that there is a misstatement in that amount. confirmation is such great evidence it's actually a specifically required substantive test. analytical procedures aren't required to be used as substantive procedures.
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