In short
Substantive procedures are audit procedures designed to detect material misstatements at the assertion level. They are either tests of details or substantive analytical procedures.
Key takeaways
- Some substantive procedures are required for every material class of transactions, account balance and disclosure, whatever the control risk.
- Higher assessed risk calls for more extensive procedures, performed closer to year-end, with more persuasive evidence.
- Examples include confirmations, vouching, recalculation and inventory observation.
Where it's tested
AUD: Responding to Assessed Risks — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An auditor assesses control risk as very low for the revenue cycle after successfully testing controls. Which statement is correct regarding substantive procedures for revenue?