Substantive analytical procedure
A substantive analytical procedure develops an expectation of a recorded amount or ratio and compares it with the recorded figure to identify possible misstatement. The auditor evaluates the suitability and reliability of data, the precision of the expectation and investigates significant differences.
Worked example
Using monthly staff numbers and agreed salary rates, the auditor estimates annual payroll and investigates a difference exceeding the acceptable threshold.
Common mistake
A broad comparison with last year is not automatically precise enough to provide substantive evidence for a material balance.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Direct | September 2026–June 2027 |