Audit and Assurance Practice Exam 2026 – Complete Prep Resource

The purpose of a substantive test is to provide evidence supporting the accuracy of account balances and transactions. These tests are fundamental to the audit process as they help auditors verify that financial statements are free from material misstatements and accurately reflect the financial position of an entity.

Substantive tests can take the form of detailed testing of transactions or balances, and they are designed to gather evidence that supports the claims made in the financial statements. This includes checking the details of transactions, confirming account balances with third parties, and reviewing documentation to ensure everything is accurate and complete.

While evaluating the internal control system is important for understanding the overall framework within which financial reporting occurs, it is not the primary focus of substantive tests. Similarly, preparing financial statements is the responsibility of management, and assessing management's performance is typically done via other means, such as performance reviews or governance assessments, rather than through substantive testing. Hence, the focus of substantive tests distinctly aligns with verifying and validating the accuracy of financial data, which is critical for the integrity of the audit process.