Substantive tests of costs and expenses that are always performed include:
A) reviewing interim financial statements and investigating fluctuations or the absence of expected changes.
B) comparing the current year's expenses to the prior year's actual and the current year's budgeted amounts.
C) obtaining detailed analysis of selected costs and expense accounts and tracing the details to the source data.
D) all of the above.

Question

Quizplus · Accepted Answer

All of the options listed are substantive tests of costs and expenses that are always performed. Reviewing interim financial statements and investigating fluctuations or the absence of expected changes helps ensure that expenses are accurately recorded and any potential issues are identified. Comparing current year expenses to prior year actuals and the current year's budget allows auditors to identify any significant fluctuations or deviations that need further investigation. Obtaining detailed analysis of selected costs and expense accounts and tracing the details to the source data ensures accuracy and completeness of expense reporting. Therefore, all of these options are necessary for properly substantiating costs and expenses.

Substantive Tests of Costs and Expenses That Are Always Performed