Substantive Procedures and Substantive Analytical Procedures

[kauri]

Can anyone tell me whats the different between Substantive Procedures and Substative Analytical Procedures?
Thanks so much.

[dragoon_alex]

Can anyone tell me whats the different between Substantive Procedures and Substative Analytical Procedures?
Thanks so much.

The substantive procedures means auditor check the balance to ensure to ensure all the record are correct.

Substative analytical procedures is one of approach to prove the substantive procedures is correct.

[dinga2009]

Kauri,

I have just joined the forum today and I have come across your question. Indeed these terminologies are confusing. I came across the the descriptionof the said procedures on internet and thought I would share with you. I found it very useful:

Substantive procedures (or substantive tests)
This is where the auditor will trace a sample of transactions from their underlying documentation to their ultimate destination in the financial statements (cost of sales, for example).

Purchases documentation:
1. Purchase Order
2. Goods receipt Note
3. Invoice
4. Stock Records
5. Suppliers purchase ledger account
6. VAT control account
7. Creditors control account
8. Nominal ledger.

Substantive testing is the detailed testing the auditor will undertake on transactions and balances e.g. in a sales audit, the auditor will start with the initial customer order, trace the order to the sales invoice, trace the sales invoice to the customers ledger account, to the debtors control account, to the VAT account (where appropriate) to the sales within the financial statements and to eventual payment.

SUBSTANTIVE ANALYTICAL PROCEDURES
When performing substantive analytical procedures, the auditor develops an expectation about a current financial statement amount using other data--such as comparable prior years' amounts, industry statistics or budgeted amounts. The auditor then compares the expectation to the current amount and investigates any significant differences that resulted.

[Vanessa]

Originally Posted by kauri View Post
Can anyone tell me whats the different between Substantive Procedures and Substative Analytical Procedures?
Thanks so much.

Hi,

We can summarise the following:

Substantive procedures include the following tests:
Test of details
Test of account balances
Subsatantive analytical procedures

The first two are the detailed checking, vouching, physical verification, etc. However the third test is analytical procedures.

So take care in case you have Qs on this topic.

Regards

Vanessa:smile:

[kauri]

Thank you all!
Now I just remember that SAP is one type of SP.This way is easy for me! Hope it also help you guys.
Good luck for the exam!

[marimo]

Can anybody describe what the below no.4-8 look like and what they are
I know the word but I cannot imagine what they look like when used etc?
Also could you tell me how to tackle audit test /substantive procedure question ?

Purchases documentation:
1. Purchase Order
2. Goods receipt Note
3. Invoice
4. Stock Records
5. Suppliers purchase ledger account
6. VAT control account
7. Creditors control account
8. Nominal ledger.

Kind Regards

[Vanessa]

Hi,

The above mentioned documents contain the following:

Purchase Order: document containing details of purchase orders raised on vendors
Ø Goods receipt Note: document containing details of goods received from vendors
Ø Invoice: purchase invoices raised by vendors
Ø Stock Records: it means inventory records
Ø Suppliers purchase ledger account: it is a vendor ledger
Ø VAT control account: ledger account relating to VAT entries
Ø Creditors control account: supplier’s ledger
Ø Nominal ledger: ledgers of debtors, creditors

Regards

Vanessa

[sha-bee]

Okay, since we are talking about SAP and SP, I want to know what is the difference between, substantive analytical procedures and analytical procedures?. If there is any.

[viji]

Analytical procedures can be used at various stages of audit i.e. at the planning stage, at the evidence gathering stage i.e. while performing substantive testing and at the final review stage.

The concept of analytical procedures does not differ at either of the stages. However when we use analytical procedures at the substantive procedure stage, it is known as 'Substantive anlalytical procedures'