Substantive test

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Substantive test
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Substantive test is a tool that allows you to assess the reliability of financial statements and financial documents under the account of errors and irregularities[1].

Carried out, a Substantive test can be defined as a procedure for verifying the validity and exclusion of irregularities in the financial statements. These tests are part of the financial audit, which is responsible for the regularity of the audit cash. Employees performing these tests must check each [2]: entry, document, transaction and direct evidence in detail. Substantive testing is an expensive activity due to the time investment necessary for checking every document and contact. The direct evidence must be examined in detail, recalculated and regenerated. This method differs from traditional signature search, important and key entries in computer registries. It is important to tests focus their strength on full system evaluation and perform compliance tests, if all conditions are met, where you can then rely on audit evidence. This method of testing is fully accurate if everything is done in accordance with the procedures [3].

In addition, the audit carried out involves the risk of the auditor's rejection of the report if irregularities are found[4].

The essence of substantive tests

These tests are responsible for [5][6]:

  • catching the incorrect and erroneous documents
  • obtaining evidence of the smooth and correct operation of financial transactions
  • for the audit of the accounting balance of enterprises
  • testing the risk of incorrect rejection and acceptance
  • reducing audit risk in possible low level
  • assisting in the selection of procedures for income accounts linked to other accounts, such as contractual obligations, cash or physical inventory.

Example how test works

For instantce examining validty of purchases recorded in the nominal ledger[7]:

  1. First action is taking random samples of purchase
  2. Second and the most important action is tracking samples of purchase on the goods received notes and invoices, checking documents, control procedues and evidence of sale and purchase
  3. Last action are conclusions and results from operation on the conformity of documents.

The same test can be used to check control procedues and compliance tests for initialling purchase invoices, because of the accounting authorisation and access to invoices constitute evidence that the deails of transation had been matched.

Substantive test advantages

The most common advantages below[8]:

  • precise
  • full
  • accurate
  • veracious

Substantive test disadvantages

The most common disadvantages below [9]:

  • time-consuming
  • laborious
  • expensive


  1. Krzywda D., 2005
  2. Jones P., 1999
  3. Jones P., 1999
  4. Delaney P.R, Whittington O.R. 2012
  5. Delaney P.R, Whittington O.R. 2012
  6. Aicpa, 2019
  7. Ghatalia S.V.,1989
  8. Jones P.,1999
  9. Jones P.,1999


Author: Karolina Piwowarczyk