test of control and substantive tests

Ra yan - by all means help out your fellow students on the ACCA forum, but please leave the Ask the AAA Tutor posts to me :-) Antonella - I am not sure why you refer to IA - are you thinking internal audit? In the context of the external/statutory audit of financial statements it is the external/auditor who tests controls if seeking to place reliance on them. Then yes, if the number of exceptions in applying controls is unacceptable - i.e. the control is NOT effective, the auditor must revert to full substantive procedures. But, as Ra yan points out - even if controls are effective, there must always be some substantive procedures. This should make sense to you because tests of controls ask "was the control applied? - Y/N?" - it matters not whether the related transaction was $1, $100 or $1m. Only substantive procedures are concerned with monetary amounts (that can quantify misstatement). You might find it helpful to look at Chapter 8 of the AA notes for a more comprehensive overview.