[Anonymous]

Okay, I feel dumb for asking this. BUT I get sooo confused… can someone put in simple terms what the difference between “analytical procedures” “substantive analytical procedures” “substantive procedures” is????

I thought analytical procedures are the board, overall “general” way to look at something – for example, comparing current year with last year’s results.

I also think that substantive analytical procedures means that this the nitty-gritty…for example, instead of just comparing sales this year to sales last year (which would be an analytical procedure)…a substantive analytical procedure would be getting into more detail, so, for example, looking at a particular customer and their amounts.

And for substantive procedures, this is just testing?? Like tests of details??

Aghhhh I don’t know why this is so confusing to me!!!! Please someone help 🙁

[littlenumberrobot]

Substantive procedures are separate from analytical. Yes substantive procedures are usually test of details, etc. BUT you may use analytical procedures AS a substantive procedure. Analytical procedures are required at the planning and wrapping up stages in the audit. They MAY be used during the audit as a substantive procedure.

Hope this helps!

CA CPA - All because of the journey listed below
-----------------------------------------------------------------------
FAR - 53('10), 8/25/12 79 PASSED!
REG - 66('11), 69('12), 12/06/12 77 PASSED!!
BEC - 58('10), 74('12), 01/05/13 77 PASSED!!!
AUD - 43('11), 66('12), 69('13), 74('13) 7/29/13 85 PASSED!!!!!

(Combinations of Roger, Yaeger, Wiley Book, Wiley TB, & NINJA Notes)

Ethics 90%

[littlenumberrobot]

Substantive procedures are separate from analytical. Yes substantive procedures are usually test of details, etc. BUT you may use analytical procedures AS a substantive procedure. Analytical procedures are required at the planning and wrapping up stages in the audit. They MAY be used during the audit as a substantive procedure.

Hope this helps!

CA CPA - All because of the journey listed below
-----------------------------------------------------------------------
FAR - 53('10), 8/25/12 79 PASSED!
REG - 66('11), 69('12), 12/06/12 77 PASSED!!
BEC - 58('10), 74('12), 01/05/13 77 PASSED!!!
AUD - 43('11), 66('12), 69('13), 74('13) 7/29/13 85 PASSED!!!!!

(Combinations of Roger, Yaeger, Wiley Book, Wiley TB, & NINJA Notes)

Ethics 90%

[Iron_Victory]

There are 3 major types of Substantive testing.

Tests of Balances

Tests of Details

Analytical Procedures

Let me give you a real world example. My firm audits Affordable Housing Complexes and one of our tests for Revenue substantiation is Gross Potential Rent. This is somewhat an analytical procedure as we look at the approved rental rates during specific dates applied( i.e. $720 from 1/1/x1 – 5/22/x1, $740 5/23/x1 – 12/31/x1) to specific units (i.e. 2 bedroom, 3 bedroom, etc) and calculate an expectation of what the revenue should be at its upper limit. We then compare Rents received plus subsidies received against this GPR figure to substantiate the reasonableness of revenue.

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Iron_Victory]

There are 3 major types of Substantive testing.

Tests of Balances

Tests of Details

Analytical Procedures

Let me give you a real world example. My firm audits Affordable Housing Complexes and one of our tests for Revenue substantiation is Gross Potential Rent. This is somewhat an analytical procedure as we look at the approved rental rates during specific dates applied( i.e. $720 from 1/1/x1 – 5/22/x1, $740 5/23/x1 – 12/31/x1) to specific units (i.e. 2 bedroom, 3 bedroom, etc) and calculate an expectation of what the revenue should be at its upper limit. We then compare Rents received plus subsidies received against this GPR figure to substantiate the reasonableness of revenue.

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Anonymous]

Gotcha….I am still having a hard time grasping this concept – I keep getting the multiple choice wrong!! Thanks so much for your help!! 🙂

[Anonymous]

Gotcha….I am still having a hard time grasping this concept – I keep getting the multiple choice wrong!! Thanks so much for your help!! 🙂

[Amay]

Analytical procedures refers to the high level comparison of balances in the planning and wrapping up stages of an audit. Here you are just comparing balances from year to year.

Substantive analytical procedures are a type of substantive procedures. Instead of doing a test of details and making selections to vouch for example, you can get away with an analytic. The substantive analytical procedure can be as simple as comparing one year to the next (because you expect the balance to not change significantly) or more complicated such as taking into account other factors that drive a balance into your expectation (I.e we expected receivables to increase by 5% because revenues increased by 5%).

Substantive procedures refer to either a test of details or substantive analytical procedures. Hope this helps!

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Amay]

Analytical procedures refers to the high level comparison of balances in the planning and wrapping up stages of an audit. Here you are just comparing balances from year to year.

Substantive analytical procedures are a type of substantive procedures. Instead of doing a test of details and making selections to vouch for example, you can get away with an analytic. The substantive analytical procedure can be as simple as comparing one year to the next (because you expect the balance to not change significantly) or more complicated such as taking into account other factors that drive a balance into your expectation (I.e we expected receivables to increase by 5% because revenues increased by 5%).

Substantive procedures refer to either a test of details or substantive analytical procedures. Hope this helps!

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[LT-P]

so basically, “substantive procedures” is just the broad umbrella term; which is made of up of 2 specific procedures – “tests of details” and “substantive analytical procedures”?

- passed all 4 exams on my first try using Becker!

Ethics: TBD

[LT-P]

so basically, “substantive procedures” is just the broad umbrella term; which is made of up of 2 specific procedures – “tests of details” and “substantive analytical procedures”?

- passed all 4 exams on my first try using Becker!

Ethics: TBD

[acamp]

^exactly.

Substantive means you are doing some sort of auditing over a balance. And you can perform that auditing by substantive detail testing (ie: make selection, obtain invoice, payment support, etc) or substantive analytical procedure as described above (ie: payroll, with 100 employees in the prior year payroll expense was $5,000,000, with 110 employees the current year we expect payroll to be $5,500,000 and compare that $5.5M to the actual recorded payroll expense).

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[acamp]

^exactly.

Substantive means you are doing some sort of auditing over a balance. And you can perform that auditing by substantive detail testing (ie: make selection, obtain invoice, payment support, etc) or substantive analytical procedure as described above (ie: payroll, with 100 employees in the prior year payroll expense was $5,000,000, with 110 employees the current year we expect payroll to be $5,500,000 and compare that $5.5M to the actual recorded payroll expense).

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[lauriemarie5]

Remember…analytical procedures you are doing “comparisons” & “ratios” – that is what Becker has drilled into me.

REG: 80 (11/13/15)
FAR: APR 2016
BEC
AUD

"Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Winston Churchill

[lauriemarie5]

Remember…analytical procedures you are doing “comparisons” & “ratios” – that is what Becker has drilled into me.

REG: 80 (11/13/15)
FAR: APR 2016
BEC
AUD

"Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Winston Churchill

[JTS254]

This thread had some really good explanations….

https://www.another71.com/cpa-exam-forum/topic/substantive-testings-and-analytical-procedures

FAR - 84
BEC - 89
AUD - 93
REG - 87

[Author]

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