Using substantive procedures to test debt is most appropriate because there are a relatively large number of transactions involving immaterial dollar amounts.

Question

Quizplus · Accepted Answer

Substantive procedures are used for material items, meaning those that are significant in financial statements.  In this case, if there are only transactions with immaterial dollar amounts, then it is unlikely that any of them individually or in aggregate would have a significant impact on the financial statements. Therefore, substantive procedures may not be necessary, and less extensive testing procedures, such as analytical procedures or tests of controls, may be sufficient.

Using Substantive Procedures to Test Debt Is Most Appropriate Because