Differentiate between Test of Control and Substantive Tests

Differentiate between Test of Control and Substantive Tests

Tests of Controls are audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level. A test of controls is an audit procedure to test the effectiveness of a control used by a client entity to prevent or detect material misstatements.

Substantive testing is the stage of an audit when the auditor gathers evidence as to the extent of misstatements in client’s accounting records or other information. These tests are required as confirmation to maintain the declaration that the financial records of an entity are complete, applicable, and correct.

Differentiate between the terms ‘Test of Control’ and ‘Substantive Tests’

Test of Control

  • Component: Test of controls is the testing tool for assessing control risk.
  • Step: It is the second step in audit testing.
  • Types: Test of controls can be classified into two types: Concurrent test and planned tests of control.
  • GAAS: It has no specific formulation of GAAS.
  • Determination: It determines effectiveness and efficiency of internal control.
  • Basis: Test of control is the police end procedures.
  • Timing: Tests of control are done in interim date.

Substantive Test

  • Component: the Substantive test is the control mechanism of controlling detection risk.
  • Step: It is the third step in audit testing.
  • Types: Substantive test can be classified into three types.
  • GAAS: It is done in accordance with die GAAS.
  • Determination: It determines fairness of financial statements.
  • Basis: It is done on the basis of monetary error.
  • Timing: the Substantive test is done on the balance sheet date.

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