Introduction to Substantive Procedures
What Are Substantive Procedures?
Substantive procedures are audit procedures designed to detect material misstatements in financial statement assertions. They consist of tests of details and substantive analytical procedures. Auditors perform these procedures regardless of the assessed level of control risk to obtain sufficient appropriate audit evidence.
- Tests of details examine transactions, balances, and disclosures.
- Substantive analytical procedures evaluate relationships among financial data.
- The extent of substantive testing depends on assessed audit risk.
Note
Higher assessed risk generally requires more extensive substantive procedures.
Summary
Substantive procedures provide direct evidence about whether account balances and disclosures are fairly stated.