Procedures for obtaining audit evidence

Question 1

What is meant by the test of controls?

Answer 1

Audit procedures designed to evaluate the operating effectiveness of the controls in preventing or detecting and correcting, material misstatements at the assertion level. These focus on the auditor confirming their understanding of the control being in place and testing that it has operated effectively throughout the period.

Question 2

What is meant by substantive procedures?

Answer 2

Audit procedures designed to detect material misstatements at the assertion level. These focus on the auditor performing detailed procedures on the numbers in the financial statements.

Question 3

Examples of substantive procedures?

Answer 3

1. Analytical procedures
2. Enquiry and confirmations
3. Inspections
4. Recalculations

Question 4

Examples of test of controls?

Answer 4

1. Inspection
2. Observation
3. Reperformance of controls