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Syllabus D. Audit Evidence D2. Audit procedures

D2e. Control v Substantive Tests

Syllabus D2e)

Discuss the difference between tests of control and substantive procedures.

Remember that the auditor is concerned with the risk of material misstatement in the financial statements

Therefore the auditor will assess each of the areas mentioned before (control environment, control procedures etc.) in order to identify risky areas.

The auditor will then undertake tests of control to establish whether the auditor can place reliance on them

Test of Control

  • These test the systems in place by determining whether the controls over it are sufficient or not

  • If the control in place is strong, then the auditor is able to place reliance on the information generated by that particular system

Substantive procedures

  • These, on the other hand, are procedures to gain direct assurance over a figure in the financial statements.