Substantive Tests of Transaction
SubstantiveTests of Transaction
Substantivetests are tests that assist the auditor to know the validity andaccuracy of a transaction. The auditors carry out the substantivetests of the transaction to inspect the flow of transactions,underlying documents and compute for accuracy (Gray, 2013). Theauditors hope to achieve a decision on whether a transaction occurredand it is accurate. The test also helps them determine whether thetransaction is complete and correctly classified. All theseassertions will assist the auditor to come up with an opinionconcerning the financial statements.
Inthe schedule attached, our assertions can be arrived at throughsubstantive tests depending on the direction of the tests. If thetrace is done from the source documents to accounting record, then itdetects errors of understatement and provides evidence ofcompleteness (Gray, 2013). If the trace is done from the accountingrecords to the source documents (vouching), then it detectsoverstatement and shows occurrence evidence.
Gray,I. (2013). The audit process: Principles, practice and cases. London:Thomson Learning.
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