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Meaning of substantive procedure


Substantive procedures

Substantive procedures may be defined as an audit procedure designed to detect material misstatements at the assertion level.

Substantive testing is an audit procedure that examines the financial statements and supporting documentation to see if they contain errors.

Substantive procedures comprise:



Tests of details

Tests of details are used by auditors to collect evidence that the balances, disclosures, and underlying transactions associated with a client's financial statements are correct.These are of two types.





Test of transaction- Vouching

These tests are needed as evidence to support the assertion that the financial records of an entity are complete, valid, and accurate.



Test of balances -Verification

Test of balnces –Verification under this test auditor will verfy whether the assets are in the organisation are physically existing or not . If it is existing then where is locatioin of that fixed assets.


Analytical procedures.

Analytical procedures are auditing procedures that involve analysis of relationship between financial and non-financial data. These involve investigation of identified variances and relationships that seem inconsistent with each other or with other available audit evidence.J


Irrespective of the assessed risks of material misstatement, the auditor shall design and perform substantive procedures for each material class of transactions, account balance, and disclosure.




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