Substantive
Procedures
A THOUGHT PROCESS GUIDE
BCTA/BCom Hons ACC/BAcc3
PRACTICAL ILLUSTRATIONS , AND THOUGHT
APPROACH TO ANSWERING SUBSTANTIVE PROCEDURE
QUESTIONS.
MOKGOMOTSI'S SIMPLIED NOTES
, OBJECTIVE OF THE DOCUMENT:
The objective of this document is to help students develop the correct thought process
when answering substantive procedure questions in Auditing. Instead of simply
memorizing audit procedures, the aim is to understand the reasoning behind each
assertion, the evidence required and the thought process used to develop the
appropriate substantive procedures.
This document will assist you in approaching substantive procedure questions for the
following assertions:
1. Occurrence
2. Completeness
3. Accuracy
4. Cut-off
5. Existence
6. Classification
7. Presentation
Note: Assertions such as Rights & Obligations and Valuation & Allocation often
require specialized audit procedures, including procedures involving contracts, legal
documentation and external confirmations. These assertions will be discussed in Part 2
of this guide.
OVERVIEW: This document does not focus on discussing the audit procedures for
every assertion. Instead, I have used the COMPLETENESS and EXISTENCE
assertions for the TRADE RECEIVABLES LINE ITEM (REVENUE AND RECEIPTS
CYCLE) to explain the thought process behind answering substantive procedure
questions. I have also included an illustration showing the flow of transactions from
Source Documents to Accounting Records and ultimately to the Financial Statements. If
you understand the thought process behind these assertions, memorising and applying
the audit procedures should become much easier.
Lastly, it is important to be familiar with the source documents used in each accounting
cycle, as this will help you better understand and apply substantive procedures.
DISCLAIMER: BCTA, BCom Honours in Accounting, PGDip-GA and BAcc3 level.
The purpose of these notes is to provide a thought process and supporting with practical examples.
These notes are intended to supplement your lectures, tutorial questions, textbook and past exam
questions. They should not replace them. The best way to master substantive procedures is through
consistent question practice.
Notes by: Mokgomotsi Dinoke
Procedures
A THOUGHT PROCESS GUIDE
BCTA/BCom Hons ACC/BAcc3
PRACTICAL ILLUSTRATIONS , AND THOUGHT
APPROACH TO ANSWERING SUBSTANTIVE PROCEDURE
QUESTIONS.
MOKGOMOTSI'S SIMPLIED NOTES
, OBJECTIVE OF THE DOCUMENT:
The objective of this document is to help students develop the correct thought process
when answering substantive procedure questions in Auditing. Instead of simply
memorizing audit procedures, the aim is to understand the reasoning behind each
assertion, the evidence required and the thought process used to develop the
appropriate substantive procedures.
This document will assist you in approaching substantive procedure questions for the
following assertions:
1. Occurrence
2. Completeness
3. Accuracy
4. Cut-off
5. Existence
6. Classification
7. Presentation
Note: Assertions such as Rights & Obligations and Valuation & Allocation often
require specialized audit procedures, including procedures involving contracts, legal
documentation and external confirmations. These assertions will be discussed in Part 2
of this guide.
OVERVIEW: This document does not focus on discussing the audit procedures for
every assertion. Instead, I have used the COMPLETENESS and EXISTENCE
assertions for the TRADE RECEIVABLES LINE ITEM (REVENUE AND RECEIPTS
CYCLE) to explain the thought process behind answering substantive procedure
questions. I have also included an illustration showing the flow of transactions from
Source Documents to Accounting Records and ultimately to the Financial Statements. If
you understand the thought process behind these assertions, memorising and applying
the audit procedures should become much easier.
Lastly, it is important to be familiar with the source documents used in each accounting
cycle, as this will help you better understand and apply substantive procedures.
DISCLAIMER: BCTA, BCom Honours in Accounting, PGDip-GA and BAcc3 level.
The purpose of these notes is to provide a thought process and supporting with practical examples.
These notes are intended to supplement your lectures, tutorial questions, textbook and past exam
questions. They should not replace them. The best way to master substantive procedures is through
consistent question practice.
Notes by: Mokgomotsi Dinoke
