What are the three main types of substantive procedures?
The three types of substantive tests are analytical procedures, a test of details of transactions, and tests of details of balances.
What are the two types of substantive procedures?
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.
What are the substantive procedures in auditing?
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 interim audit procedures?
An interim audit involves preliminary audit work that is conducted prior to the fiscal year-end of a client. The interim audit tasks are conducted in order to compress the period needed to complete the final audit. Doing so benefits the client, which can issue its audited financial statements sooner.
What assertions do substantive analytical procedures Test?
Analytical Procedures Used as Substantive Tests
- Nature of Assertion. .
- Plausibility and Predictability of the Relationship. .
- Availability and Reliability of Data. .
- Precision of the Expectation. .
- Investigation and Evaluation of Significant Differences. .
- Documentation of Substantive Analytical Procedures. .
What are the audit assertions?
There are numerous audit assertion categories that auditors use to support and verify the information found in a company’s financial statements.
- Existence.
- Occurrence.
- Accuracy.
- Completeness.
- Valuation.
- Rights and obligations.
- Classification.
- Cut-off.
What are some examples of substantive tests?
Examples of substantive testing Verify that approved dividends exist by reviewing board minutes from the board of directors. Confirm that the balances in accounts payable are correct by contacting suppliers. Confirm that the balances in accounts receivable are correct by contacting customers.
What are types of substantive procedures?
Examples of substantive procedures are:
- Bank confirmation.
- Accounts receivable confirmation.
- Inquire of management regarding the collectibility of customer accounts.
- Match customer orders to invoices billed.
- Match collected funds to invoices billed.
- Observe a physical inventory count.
- Confirm inventories not on-site.
How do you test assertions in auditing?
To test this assertion, select a sample of fixed-asset additions/disposals and check that all have proper authorization. Accuracy: Testing accuracy addresses whether transactions are free from error. For example, your client must properly classify depreciation, repair expenses, asset movement, and impairments.
Can you describe substantive tests?
What is Substantive Testing? Substantive testing is an audit procedure that examines the financial statements and supporting documentation to see if they contain errors. These tests are needed as evidence to support the assertion that the financial records of an entity are complete, valid, and accurate.
What is meant by test checking?
Test checking is a process of selecting and checking of a few transactions from a large volume of transactions. Test checking reduces the volume of work of the auditor, if in test checking, the auditor finds that the records checked by him are correct then no further detailed checking is carried out. …
What assertions does substantive analytics cover?
The application of substantive analytical procedures is based on the expectation that relationships among data exist and continue in the absence of known conditions to the contrary. The presence of these relationships provides audit evidence as to the completeness, accuracy and occurrence of transactions.
What happens during the interim audit of assertions?
During the interim audit, the internal control system is documented and evaluated. This will determine the mix of tests of control and substantive procedures but both will tend to focus on transactions that have occurred so far in the period.
How are substantive audit procedures performed in execution stag?
As mention above, the substantive audit procedures are performing at the execution stag after auditors prepared audit planning. After audit performs understand client internal control, and test of control, then auditors will assess whether they can rely on the control or not.
What are the different types of substantive procedures?
Types of substantive procedures. There are two types of substantive procedures which are substantive analytical procedures and tests of details. Auditors must decide when it is most appropriate to use which type of substantive procedures.
What is the purpose of a substantive procedure in an audit?
The intention behind performing the Substantive procedures by an auditor is to check that there is no material misstatement in the financial records of the business, i.e., they are complete, accurate, valid, and all the material information is disclosed.
https://www.youtube.com/watch?v=GUcl33WhTkA