[Penguin Lord]

Hey guys, I’m struggling to get a good grasp of a few concepts that I keep mixing up. I know they are important though! Could someone briefly explain what the following are, and how they are or are not related?

Test of Controls
Test of Details
Analytical Procedures
Substantive Testing

Thanks, and sorry for how simple of a question this is!

[aaronmo]

Test of controls – this is testing the internal controls that management is certifying it has in place. Example – as a control to address risk of excessive bad debt expense, a company requires credit authorization from ____. The auditor will check for evidence of the authorization taking place as per control process.

Test of details – this is a test of an account. Example…AR is made up of customer accounts…a test of details will acquire evidence that the details are fairly presented – like customer conformations.

Analytic procedures – projecting what you expect accounts to be based on judgement and past experience and comparing to management reporting.

Substantive testing – a combination of testing procedures on balance sheet accounts. It also includes analytical procedures.

[sulaiman]

As an auditor, you usually do two types of testing called:
1-Test of Controls, which is as an auditor, you are testing a company control. Based on your judgement of their control (weak – strong), you decide how much time you would spend in “substantive testing-second type”

2-Substantive Testing which includes “Test of Details and Analytical Procedures”, as an auditor, you are required to do at least some of the substantive testing even if you believe the company that you are auditing have a strong control.
Notice, if an auditor believes that a company have a weak control, they can spend all of their time in only substantive testing, with a few exception (Like if the company relays heavily in using technology)

That's the basic of my understudying and I hope that helps

[Author]

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