Activity Based Risk Evaluation Model of Auditing

Substantive procedures generator

Auditors determine the nature, timing and extent of planned audit procedures during the audit planning stage. The steps below assist in identifying the nature of planned substantive procedures. Generally, the greater/lesser the risk of material misstatement, the greater/lesser the proportion of tests of detail (versus analytical procedures).

1. Indicate (right) whether the required substantive procedures relate to either an account balance or a class of transaction and select (below) the relevant account balance or class of transaction.	Account balance Class of transaction
Account balance	Class of transaction
Trade accounts receivable Cash at bank Retail inventory Trade accounts payable	Customer receipt transactions Supplier disbursement transactions Bank receipt transactions Bank disbursement transactions Retail sales transactions Purchases transactions
2. Indicate whether analytical procedures or tests of detail are required. Analytical procedures Tests of detail
3. If tests of detail are required, indicate the assertion for which evidence is required. (Note that analytical procedures generally gather evidence in relation to all three assertions.) Completeness Validity Accuracy

Note: This substantive procedure generator has been provided to assist auditing students gain the knowledge required to develop audit programs on their own initiative. Students should note the similarity of substantive procedures directed towards different account balances (or classes of transaction) but the same assertion and the dissimilarities between substantive procedures directed towards the same account balance (or class of transaction) but for a different assertion.

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