Audit and Assurance Practice Exam 2025 – Complete Prep Resource

Substantive testing refers to the detailed procedures that auditors perform to verify the accuracy and completeness of financial information and transactions. This type of testing is essential in an audit as it directly tests the underlying data that supports the financial statements. Auditors apply substantive procedures to gather evidence regarding the assertions made in the financial statements, such as existence, completeness, rights and obligations, valuation, and presentation.

By focusing on transaction accuracy, substantive testing allows the auditor to evaluate whether the transactions have been recorded properly and that the financial statements are free from material misstatement. This is crucial for achieving a high level of assurance about the financial reporting.

Other options highlight different aspects of the audit process. Procedures to assess the auditor's independence focus on maintaining ethical standards in auditing. General evaluations of internal controls relate to assessing the design and implementation of these controls, rather than verifying specific transactions. Random sampling of financial documents serves as a technique within the wider framework of substantive testing but does not encompass the full scope of what substantive testing entails.