[itooshallpass]

Could someone help clear up my confusion? I haven’t seen a clear definition differentiating these in my course and it seems like some are used interchangeably.

Substantive procedures vs. Tests of Details – – are they the same thing?

Analytical procedures – – I understand the concept of ratio analysis, but then I see mention of “Substantive Analytical Procedures”?

Tests of Controls?

Financial statement level vs. Relevant-assertion level?

Thanks 🙂

[Recked]

Yes, Substantive testing = test of details.
I would take substantive AP to be the same as AP.
Test of Controls is just what it says, testing the control methods the corp has in place to be sure you have separation for ARCC

Financial statement level is something that can affect the financials as a whole, where as the relevant assertion level would affect one particular area.
I believe the book has a breakdown of what types of thing fall into each category.

[itooshallpass]

Thank you! 🙂

[potatohead]

Analytical procedures are required during the planning stage and the overall review stage. However, it is optional during substantive testing. It can be used as a substantive test, “substantive” analytical procedures, but it is not a required substantive test.

To expand on relevant assertion level, Becker gave the mnemonic COVER U for the six main financial statement assertions:
Completeness
CutOff
Valuation, allocation, and accuracy
Existence and occurrence
Rights and obligations
Understandability and classification

Hopefully that helps

[Anonymous]

Audit Procedures = Substantive Test. This is synonymous. They’re used interchangeably.

Test of details and analytical procedures are the “types” of substantive tests. ( mnemonic: ICORRII-A)

Test of Details: Testing the details of accounts, balances, and the disclosures.
Inquiry-Ask client questions
Confirmation- ex: Asking banks for documents, #2 on reliable source list
Observation- ex: Auditor watching client count inventory, #1 on reliable source list
Recalculations- ex: recalculating bad debt expense (valuation assertion)
Re-Performance- ex: aging of A/R (valuation assertion)
Inspection of Assets- (observation and existence assertion)
Inspection of records/documents- Trace and Vouch

Analytical Procedures: Study of data comparisons and relationships.
Ex: comparing CY and PY information of an account you’re testing.

[Author]

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