In the context of an audit of financial statements,substantive tests are audit procedures that
A)may be eliminated under certain conditions.
B)are designed to discover significant subsequent events.
C)may be either direct tests of financial balances or analytical tests.
D)will increase proportionately with the auditor's reliance on internal control.

Question

Quizplus · Accepted Answer

Substantive tests are audit procedures that can be either direct tests of financial balances or analytical tests. These tests aim to provide reasonable assurance that the financial statements are free from material misstatement, whether caused by error or fraud. Option A is incorrect because substantive tests are essential and cannot be eliminated under any condition. Option B is incorrect because subsequent events are not the focus of substantive tests. Option D is incorrect because the nature, extent, and timing of substantive tests depend on the assessed level of inherent and control risk, but not on the auditor's reliance on internal control.

In the Context of an Audit of Financial Statements,substantive Tests