What Are The Two Types Of Substantive Procedures?

What are non substantive analytical procedures?

Non-Substantive Approaches A risk-based audit approach focuses on the analysis of the company and its management.

While a more traditional approach will focus on transactions and financial records, a non-substantive approach such as risk-based auditing will identify the greatest risk factors to the organisation..

What are substantive tests of details?

Substantive testing or substantive procedure is the technique used by the auditor to obtain the audit evidence in order to support auditor opinion. … Substantive testing is sometimes called detail testing where the main objective is to verify the balances, transactions, and disclosures of financial statements.

What is the difference between control test and substantive test?

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. … This control test provides evidence that the client is checking their own figures.

What are the different types of substantive tests?

The three types of substantive tests are analytical procedures, a test of details of transactions, and tests of details of balances.

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

Substantive procedures are used during an audit to test for a material misstatement of the financial statements. Substantive procedures are comprised of Tests of Details and Analytical procedures.

What are the substantive procedures?

Substantive procedures (or substantive tests) are those activities performed by the auditor to detect material misstatement or fraud at the assertion level. The different assertions of balances are: existence, rights and obligations, validity, and.

Is vouching a substantive procedure?

Because the purpose of the vouching technique is to obtain evidence about a recorded item in the accounting records, the direction of the search for the supporting documents is crucial. … Re-performance – The re-performance of client activities involved in the accounting process is a common substantive technique.

What is the difference between audit procedures and substantive procedures?

Audit procedures consist of tests of control and substantive procedures; ‘audit procedure’ is the global term. AEIOU can be used for substantive procedures. EIOU can be used for tests of control. (You can’t use analytical procedures for tests of control.)

What is a substantive approach?

Definition: 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.

What is primary substantive procedures?

Substantive procedures are intended to create evidence that an auditor assembles to support the assertion that there are no material misstatements in regard to the completeness, validity, and accuracy of the financial records of an entity.

Is recalculation a substantive procedure?

Recalculation procedures can be used as a test of control and a substantive test, and like reperformance, it results in audit evidence obtained directly by the auditor so it is considered to be highly reliable evidence. The procedure can be done manually, but is most often done using CAATs.

How do you perform a substantive test?

Substantive testing definitionIssue a bank confirmation to test ending cash balances.Contact customers to confirm that accounts receivable balances are correct.Observe the period-end physical inventory count.Confirm the validity of inventory valuation calculations.More items…•Apr 13, 2021

Are analytical procedures substantive procedures?

Analytical procedures are used as a substantive test to obtain evidential matter about particular assertions related to account balances or classes of transactions. In some cases, analytical procedures can be more effective or efficient than tests of details for achieving particular substantive testing objectives.

What are substantive audit procedures?

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 …

What are substantive analytical procedures?

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 are the two forms of test of details?

There are three types of tests to check for the test of details; the test of controls, the test of transactions, and the test of balances. Tests of controls are performed to measure the effectiveness of controls. The test of transactions is done to check for the accuracy of the financial statement transactions.

What are audit procedures?

Audit procedures are used by auditors to determine the quality of the financial information being provided by their clients, resulting in the expression of an auditor’s opinion. … Audit procedures are used to decide whether transactions were classified correctly in the accounting records.

What is the meaning of substantive?

substantive \SUB-stun-tiv\ adjective. 1 : having substance : involving matters of major or practical importance to all concerned. 2 : considerable in amount or numbers : substantial. 3 a : real rather than apparent : firm; also : permanent, enduring. b : belonging to the substance of a thing : essential.

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