Substantive Procedures
Section 3 is 30-40% of the AUD exam, the heaviest section, and substantive procedures are its backbone. The #1 AICPA trap is reversing the direction of testing: vouching tests existence, tracing tests completeness, and candidates mix them up constantly. Under AU-C 330, your substantive procedures must respond directly to the risks you assessed, and for significant risks like revenue recognition, analytics alone are never enough. Many candidates also forget that AU-C 505 requires confirmations to go straight to the third party, they can never be routed through the client.
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What AICPA wants you to know
- 1Distinguish between tests of details and substantive analytical procedures
- 2Match substantive procedures to financial statement assertions
- 3Understand when substantive procedures are required for significant risks
- 4Explain the five management assertions for account balances, transactions, and disclosures
- 5Apply substantive procedures to key balance sheet and income statement accounts