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Difference between tests of controls/ details, substantive procedures & analytical procedures/ reviews?

0 Votes
Difference between tests of controls/ details, substantive procedures & analytical procedures/ reviews?

Hi to anyone who can help!

I appreciate that these are fundamental concepts but they're something I've found difficult to get my head around since I started studying the topic. I find it really difficult to get a clear understanding of each one and it feels like my tutor uses them interchangeably which confuses me even more!!

Any help/ pointers would be greatly appreciated :-)

May 5th 2015 AN ACCA USER 120 Points 1 Flag
Recategorized May 7th 2015 AN ACCA USER

2 Replies

+9 Votes
  1. Test of control are checks performed to verify whether internal controls are working using for example Enquiry, Observation etc.
  2. Substantive procedures are checks of detail to verify different assertions in the Financial statements for example Inspecting the existence of a fixed asset say motor vehicle is a substantive procedure to ascertain existence.
  3. Analytical procedures is part of the fives sources of evidence used in substantive procedures under the mnemonic (AEIOU) and Tests of control except that analytical procedures can not be used as a source of evidence to test whether internal controls are working in a client organisation.

Regards,

Fred Bugingo

May 9th 2015 AN ACCA USER 320 Points
+5 Votes

Test of controls and substantive procedures are all part of audit procedures.

Test of controls is an audit test to test the effectiveness of the client's internal control system.

substantive procedures is an audit test to test the reasonableness of items in the finincial statements.

If the internal control is effective, then the auditor will use more test of controls and less substantive tests.

If the internal controls are less effective, then the auditor will use more on substantive tests.
And this will take more audit time.

There are 7 audit procedures includes observation, inquiries, inspection, reperformance, recalcuation, confirmation, analytical procedure.
The first four are belongs to test of control, the last three are part of substantive procedures. So analytical procedure is also test the reasonableness of items in FS. It is use of ratios and trend analysis in order to enable the auditor to develop certain expections as how the figures in FS will look like.

Holly Qian

May 17th 2015 AN ACCA USER 320 Points
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