In an audit of financial statements, substantive tests are audit procedures that___________?
Correct answer: D. may be test of transactions, test of balance and analytical procedures
- A. may be eliminated for an account balance under certain conditions
- B. are designed to discover significant subsequent events
- C. will increase proportionately when the auditor decreases the assessed level of control risk
- D. may be test of transactions, test of balance and analytical procedures
Explanation
Substantive procedures include tests of transactions, tests of account balances, and substantive analytical procedures. They do not normally replace procedures for subsequent events, and stronger controls generally reduce rather than increase substantive testing.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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