What are substantive procedures? Thus, substantive procedures are performed by an auditor to detect whether there are any material misstatements in accounting transactions. Substantive procedures include the following general categories of activity: Testing classes of transactions, account balances, and disclosures. Agreeing the financial statements and accompanying notes to the underlying accounting records. Here are some of the accounts receivable audit procedures that they may follow: Trace receivable report to general ledger.Examining material journal entries and other adjustments made during the preparation of the financial statements. At a general level, substantive procedures related to testing transactions can include the following: Examining documentation indicating that a procedure was performed. Reperforming a procedure to ensure that the procedure functions as planned. Inquiring or observing regarding a transaction. Examples of substantive procedures are: Bank confirmation. Accounts receivable confirmation. Inquire of management regarding the collectibility of customer accounts. Match customer orders to invoices billed. Match collected funds to invoices billed. Observe a physical inventory count. Confirm inventories not on- site. Match purchasing records to inventory on hand or sold. Confirm the calculations on an inventory valuation report. Accounts Payable Substantive procedures. Substantive procedures - Accounts Payable framework.mmap - -. Substantive tests of transactions and substantive tests. This approach is called the substantive approach to an audit. Testing accounts payable provides evidence about the most significant current liability of many companies. Commonly called 'trade payables' when the. Observe fixed assets. Match purchase orders and supplier invoices to fixed asset records. Confirm accounts payable. Examine accounts payable supporting documents. Confirm debt. Analytical analysis of assets, liabilities, revenue, and expenses. Thus, an auditor who is testing a validity assertion regarding a company's fixed assets could conduct a physical observation of the assets, and then test for record accuracy by evaluating whether there is an asset impairment. Performing Audit Procedures in Response to Assessed. Performing Audit.20 The auditor should use external con To as analytical procedures used to plan the audit).08 When substantive analytical procedures have been. 9 8 4 Sources of Accounts Receivable Sources Claims. Risk analyses and audit program. Audit Steps (4 of 4) Substantive Procedures for. Feedback document – Audit program, substantive test of sales and accounts receivable. Feedback document – Audit program, substantive test of sales and accounts. Substantive procedures are included in the audit plan around which an audit is structured. If the results of substantive procedures are not as expected, additional procedures may be added to the audit plan. Related Topics. Audit based on risk. Control assessment updates. Expense report audit techniques. Over- auditing of internal audits. Self- audit guides.
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