TAP Ch.7: Substantive Testing

Question 1

7.1: What are substantive tests

Answer 1

They are audit procedures designed to detect material misstatements in transactions, balances and disclosures

Question 2

7.2: what are the two types of substantive tests?

Answer 2

1. Substantive tests of transactions
2. Substantive tests of balances

Question 3

7.3: Why do auditors perform substantive tests of transactions

Answer 3

Detect errors and fraud
Confirm transactions are valid and complete
Support financial statement assertions

Question 4

7.4: What are the limitations of substantive testing?

Answer 4

Sampling risk
Fraud concealment
Reliance on documentation
Judgement involved