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Hello Sir,
I read the following article to understand difference between TOC and Sub. Tests: https://opentuition.com/articles/f8/audit-tests-difference-tests-control-substantive-tests/
Please guide me which of below is correctly understood by me?
——————————————– 1 —————————————-
If an auditor carry out TOC on client’s system and do following procedure:
-Enquiry & confirmation
-Inspection,
-Observation.
-Recalculation and reperformance.But he/she find the control to be not so effective. So now the auditor further need to carry out following procedure only,
-Analytical procedures
As all other(EIOU) where already done in test of controls above?
———————————- OR —————————————
EIOU of “substantive Test” and EIOU of “Test of controls” are totally different from one another?
Sorry if I couldn’t explain my question more clearly Sir. I would be thankful if you can guide me here please.
Cidra
EIOU can be done used as either a TOC or a Substantive test it how in-dept you go that makes the difference.
When you are doing substantive procedures you use AEIOU in conjunction with the audit assertions – ACCURATE or PROVE (Presentation, recalculation, occurrence, valuation and existence) .
in TOC you would inspect a GDNs for signature to ensure that customers received the goods and acknowledge receipt for it. In TOD you would match back those receipts to the necessary ledgers for completeness.
it took me a while to understand them fully but the study text does break them down giving you them in the column format the examiner prefers.
@latoyah: you are substantially correct. Perhaps your first line should say:
EIOU can be done used as either a TOC or a Substantive test. It’s what you look at that makes the difference. In TOC you look at the operation of controls; in substantive procedures you look at direct verification of teh assertions made by a figure in the FS.
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