Substantive testing (test of detail) is used to:

• A. Tests to prove balances in financial statements.
• B. Always done, even if controls are trusted.
• C. Only analytical procedures are used.
• D. It does not involve testing the balances.

Answer: (A)

The aim of substantive testing is to obtain evidence about the monetary amounts and disclosures in the financial statements. When we do test of detail, we examine individual transactions and balances, look at supporting documents, perform recalculations, and sometimes confirm balances with third parties to verify that the numbers recorded truly reflect what happened. This is how auditors validate the balances shown in the financial statements, ensuring they are accurate, complete, and properly presented.

Analytical procedures are a separate tool used in substantive testing, but they are not the only method, and relying on controls can reduce the extent of substantive testing required—you may not always perform extensive detail testing if controls are strong and effective. It’s incorrect to say it never tests balances or that it must always be done regardless of control reliance.