Tests of controls evaluate the effectiveness of internal controls, and are performed during the audit to assess control risk. Substantive tests examine account balances and transactions to detect misstatements, and are the third step in the audit process aimed at controlling detection risk. Tests of controls are done at an interim date and focus on procedures, while substantive tests are performed at the balance sheet date and examine account balances on a monetary basis such as inventory counts.
Tests of controls evaluate the effectiveness of internal controls, and are performed during the audit to assess control risk. Substantive tests examine account balances and transactions to detect misstatements, and are the third step in the audit process aimed at controlling detection risk. Tests of controls are done at an interim date and focus on procedures, while substantive tests are performed at the balance sheet date and examine account balances on a monetary basis such as inventory counts.
Tests of controls evaluate the effectiveness of internal controls, and are performed during the audit to assess control risk. Substantive tests examine account balances and transactions to detect misstatements, and are the third step in the audit process aimed at controlling detection risk. Tests of controls are done at an interim date and focus on procedures, while substantive tests are performed at the balance sheet date and examine account balances on a monetary basis such as inventory counts.
2. Please differentiate Tests of controls and Substantive Tests Give examples.
TOC Substantive Test
Test of controls is the testing tool for The Substantive test is the control mechanism assessing control risk of controlling detection risk The second step in audit testing The third step in audit testing. Test of controls can be classified into two Substantive test can be classified into three types: Concurrent test and planned tests of types control It determines effectiveness and efficiency of It determines fairness of financial statements internal control Test of control is the police end procedures It is done on the basis of monetary error Substantive test is done on the balance sheet Tests of control are done in interim date date Ex: The auditor just documents about purchasing system of the client as the Ex: Watch the physical inventory count as it purchase is part of the significant process in happens for each ending period the operating expenses, inventories as well as fixed assets sections.