Which of the following is an example of substantive test?

As indicated by the examples, substantive testing is likely to include confirmation of account balances with third parties (such as confirming receivables), recalculating calculations made by the client (such as valuing inventory), and observing transactions being performed (such as the physical inventory count).

Which of the following is a type of substantive audit procedure?

There are two categories of substantive procedures – analytical procedures and tests of detail. Analytical procedures generally provide less reliable evidence than the tests of detail.

Is Test of details a substantive procedures?

Test of details is a type of substantive procedures that auditors use to verify details of individual transactions. There are many types of tests of details that auditors can use, including vouching, tracing, confirmations, checking contracts, etc. The test of details is also different from analytical procedures.

Is Test of controls a substantive procedures?

In simple terms, control tests involve checking that a client’s control is working, whereas a substantive test involves ignoring client systems and just checking the numbers. An example: Companies try to ensure their cashbooks and bank statements are accurate by reconciling them.

What is substantive audit procedure?

Substantive procedures are the method or audit tests designed by an auditor to evaluate the financial statements of the company which require an auditor to create conclusive evidence for verifying the completeness, accuracy, existence, occurrence, measurement, and valuation (audit assertions) of the financial records …

Which of the following is a substantive procedure?

Substantive procedures include the following general categories of activity: Testing classes of transactions, account balances, and disclosures. Agreeing the financial statements and accompanying notes to the underlying accounting records.

What is substantive procedure?

A substantive procedure is a process, step, or test that creates conclusive evidence regarding the completeness, existence, disclosure, rights, or valuation (the five audit assertions) of assets and/or accounts on the financial statements.

What is a substantive audit approach?

Substantive Audit Approach is one of the audit approaches used by auditors to verify the event and transactions in the financial statements by cover the larges volume of them. A substantive audit approach could be used by both internal audit and external audit activities and it is sometimes called a vouching approach.

What is a substantive audit procedure?

What is substantive and compliance testing in audit?

Substantive procedures are tests designed to obtain evidence to ensure the completeness, accuracy and validity of the data. Compliance testing checks for the presence of controls. Substantive testing checks the integrity of contents.

What is test of control and substantive test?

A test of controls is an audit procedure to test the effectiveness of a control used by a client entity to prevent or detect material misstatements. Substantive testing is the stage of an audit when the auditor gathers evidence as to the extent of misstatements in client’s accounting records or other information.

What is substantive analytical procedure?

Substantive analytical procedures are used to obtain evidential matter about particular assertions related to account balances or classes of transactions. Final analytical procedures are used as an overall review of the financial information in the final review stage of the audit.

What is substantive test of details in auditing?

Substantive tests of details. Substantive test of detail is another type of substantive procedures. In this case, tests of details are the audit procedures that auditors perform to test various audit assertions of significant account balances, classes of transactions, and disclosures of the client’s financial statements.

What is the difference between substantive analytical procedures and tests of details?

Likewise, auditors usually perform tests of details, instead of substantive analytical procedures, when there is a high risk of material misstatement on significant accounts or balances. Hence, comparing to substantive analytical procedures, tests of details are more direct when testing various audit assertions.

What are the audit procedures involving accounts receivable balance?

The most common audit procedure involving the accounts receivable balance is confirmation. To test that accounts receivable exist, the auditor will send letters to a sample of the client’s customers asking to verify the amount that is owed to the company being audited.

What are tests of details in accounting?

In this case, tests of details are the audit procedures that auditors perform to test various audit assertions of significant account balances, classes of transactions, and disclosures of the client’s financial statements.