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Hi, i am having a problem in understanding what are substantive tests. Also what is the difference between substantive tests and substantive analytical procedures. I have read a few previous threads which provide information on it, but i cant quite grasp it. If someone could help, would be greatful. Thanks in advance.
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Substantive test:- is the tests or procedures conducted by the auditor to detect material misstatements in the FS………as it sounds its a test, practically its like picking a number and checking for material misstatement. is that clear!!
Substantive Tests are divided into two:- 1) test of details and 2) analytical procedures. So substantive analytical tests are the sub-set of substantive tests….so in this case we explained substantive Tests, now lets describe substantive analytical procedures
Analytical procedure is evaluation of financial information to identify plausible relationships that are unusual or inconsistent with other information:- so in this case for example, when auditor looks the FS and compares with non financial statement and difference arises, then he should carry out procedures to get evidence of what it is that made the difference through asking management.
Test of detail:- is picking number on the FS and checking it for accuracy, completeness, evaluation, classification and so on
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