What is the difference between test of detail and substantive procedure?

As you can see, a test of details is just what it says it is. You are digging into the details of transactions. Substantive analytics, by contrast, look at numbers from a broader perspective. For example, the auditor might compute the current ratio or compare this year’s debt level with prior years.

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 test of detail in audit?

What are Tests of Details? Tests of details are used by auditors to collect evidence that the balances, disclosures, and underlying transactions associated with a client’s financial statements are correct.

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

Analytical procedures are used as substantive procedures when the auditor considers that the use of analytical procedures can be more effective or efficient than tests of details in reducing the risk of material misstatements at the assertion level to an acceptably low level.

What is the difference between substantive testing & test of controls?

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.

Is Test of detail a substantive procedure?

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.

What is substantive procedure in audit?

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 is substantive procedures in auditing?

What are 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.

What is substantive analytical procedures in auditing?

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 substantive procedures in auditing?

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.