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Hello
I have a question from audit tests. Is matching customer orders to invoice a compliance test or a substantive test?
Also, I am little confused with substantive testing. Can someone please clarify the same with a simple example?Thanks.
If the autitormdoes the matching, it is a substantive test because the auditor is collecting evidence that orders exist/paymemts are valid. If the auditor is testing for evidence that the client/accounting staff carried out the matching, thhen the test is a compliance test.
Substantive testing is where the auditor carries out processes such as claculating ratios, tracing postings, ensuring account codes are correct.
Procedurla tests, or tests of control, are when the auditor tests that an internal control has been carried out.
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