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“The auditor must carry out substantive procedure on all material items”
True /falseHi sir, i would like to ask regarding this question. Why the answer is false?
My lecturer said that substantive procedure must carry out for immaterial items too.
Is there any other reason that could be explain for the statement above to be false?Because i think that substantive procedure will be performed to immaterial items too but NOT ALL. Depends on whether there the effectiveness of the control held by the company.
Thank you in advance sir! 🙂
I don’t know where you’re getting it from but as you have written it, for the purposes of AA I would say it is a true statement:
“ISA 330 requires that the auditor shall always carry out substantive procedures on material items irrespective of the assessed risks of material misstatement, and that the auditor shall design and perform substantive procedures for each material class of transactions, account balance, and disclosure.” https://www.accaglobal.com/vn/en/student/getting-started/acca-qualification-structure.html
Some individually immaterial items will invariably be tested (which has nothing to do with the relative effectiveness of control – e.g. see monetary unit sampling in our notes) – so it would not be true that “only material items” are substantively tested – but that isn’t what you have quoted.
I got it sir ! Thank youu so much for your
detailed explanation, really appreciate it 🙂 have a good day!
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