Audit and Assurance Practice Exam 2026 – The Complete All-in-One Guide for Exam Success!

Substantive tests are designed specifically to detect material misstatements in account balances or transactions. These tests provide direct evidence about the accuracy and completeness of the financial information presented in the financial statements. By focusing on the actual transactions and balances, auditors can ascertain whether the amounts reported are free from significant errors that could mislead users of the financial statements.

Substantive tests include procedures such as inspecting documents, confirming account balances with third parties, and performing analytical procedures to assess accuracy. This approach is crucial for identifying possible errors or fraud, which can significantly impact the financial health of an organization. Thus, the primary objective of substantive testing is to obtain relevant and reliable audit evidence regarding the assertions related to account balances, transactions, and disclosures in the financial statements, which aligns perfectly with the aim of detecting material misstatements.