Audit and Assurance · Audit procedures

Tests of Controls vs Substantive Procedures in ACCA Audit and Assurance

Updated 11 October 2026 · Fact-checked

Tests of controls check whether a control operated effectively, so the auditor can rely on it. Substantive procedures check the figures and disclosures directly, through tests of detail and analytical procedures. Use controls tests when you plan to rely on controls. Always perform substantive procedures on material items.

Understand Tests of Controls and Substantive Procedures

An auditor must gather enough appropriate evidence that the financial statements are free from material misstatement. There are two broad ways to get it. You can test the system that produces the numbers, or you can test the numbers themselves.

Tests of controls test the design, implementation and operating effectiveness of a client's controls. For example, you check that purchase invoices are matched to goods received notes and orders before payment. If the control worked all year, the risk of error in purchases is lower. The results let you reduce the amount of substantive work.

Substantive procedures test the financial statement amounts directly. They come in two types. Tests of detail examine individual transactions, balances or disclosures, such as agreeing a receivables balance to a customer confirmation. Substantive analytical procedures examine relationships and trends, such as comparing monthly payroll cost with headcount.

The key link is risk. If controls are strong and you plan to rely on them, you test them and then do less substantive work. If controls are weak, absent or not worth testing, you do a mainly substantive approach with more extensive testing. Substantive procedures are required for each material class of transactions, account balance and disclosure, whatever the assessed risk. Controls testing is also required where substantive procedures alone cannot give sufficient appropriate evidence, for example with highly automated systems that leave little documentary trail.

A simple memory aid: tests of controls answer "did the control work?" Substantive procedures answer "is the number right?"

Key rules to remember

Tests of controls: Purpose = operating effectiveness of controls → evidence on control risk; Used when you plan to rely on controls, or when substantive procedures alone are not enough.
Substantive procedures: Substantive procedures = tests of detail + substantive analytical procedures; Directly address the risk of material misstatement in balances, transactions and disclosures.
Link to risk: Higher assessed risk → more extensive, more persuasive substantive evidence; Lower risk with effective controls allows less substantive work, but never none for material items.
Rule of thumb for direction: Completeness → trace from source documents to records; Existence → trace from records to source or physical item; Use this to choose the starting point of a test of detail.

How to solve Tests of Controls and Substantive Procedures questions

Use this method for any question asking you to identify, distinguish or write procedures.

1Read the requirement. Decide if it asks for tests of controls, substantive procedures, or both.
2Identify the area (for example sales, inventory, payroll) and the assertion or risk in the scenario.
3For controls: name the control, then give a test. Use inspection, observation, enquiry or re-performance.
4For substantive procedures: decide whether a test of detail or an analytical procedure fits the assertion.
5Write each procedure as an action: verb, what you examine, and what you compare it to.
6Make sure each procedure links to a stated assertion, such as existence, completeness or valuation.
7Check you have not mixed up the two types. Controls tests relate to a control; substantive tests relate to a balance or transaction.

Quickest way: Verb-object-purpose in one line

When to use it: When you must write several procedures fast in Section C.

Pick the assertion first (existence, completeness, valuation, rights, cut-off).
Write: Verb + document or item + compare to + purpose.
Controls example: Re-perform the three-way match on a sample of invoices to confirm the control operates.
Substantive example: Agree a sample of year-end receivable balances to customer confirmations to confirm existence.
Aim for one clear procedure per mark and move on.

Common mistakes in Tests of Controls and Substantive Procedures

Describing a control instead of a test of it.
Students recall the system description, such as "invoices are authorised", without saying how the auditor tests it.
Fix: Start with an audit verb: inspect, observe, re-perform, enquire. For example, inspect a sample of invoices for evidence of authorisation.
Writing tests of controls when asked for substantive procedures.
The scenario discusses controls, so students stay on that topic.
Fix: Check the requirement wording. Substantive procedures test balances and transactions, not the system.
Saying good controls mean no substantive procedures are needed.
Students overstate the benefit of reliance on controls.
Fix: Substantive procedures are still required for each material balance, class of transactions and disclosure. Controls only reduce the extent.
Vague procedures such as "check the balance" or "review the records".
Students rush and omit what is examined and compared.
Fix: Name the document and what it is compared to, for example agree the closing balance to the bank confirmation.
Testing in the wrong direction for the assertion.
Students do not link direction of testing to assertion.
Fix: For completeness, start from source documents and trace to the records. For existence, start from the records and trace to the item or document.
Treating enquiry alone as sufficient evidence.
Enquiry is quick to write.
Fix: Combine enquiry with inspection, observation or re-performance, because enquiry alone does not give enough evidence on control operation.

Worked examples

Example 1

Sales orders at Zenith Co are approved by a sales manager and credit limits are checked before despatch. Write three tests of controls over this process.

Show the solution

The area is sales and the controls are order approval and credit limit checks.
Choose procedures that test the control operation, not the sales balance.
Use inspection for approval evidence, re-performance for the credit check and enquiry or observation for how it works in practice.

Answer: 1. Inspect a sample of sales orders for evidence of sales manager approval, such as a signature or system flag. 2. Re-perform the credit limit check on a sample of orders by comparing the customer's balance and order value with the approved limit. 3. Observe the despatch department to confirm goods are not released without an approved order, and enquire of staff what happens when the credit limit is exceeded.

Example 2

You are auditing trade receivables of Orbit Co. Write four substantive procedures, stating which are tests of detail and which are analytical procedures.

Show the solution

The balance is trade receivables, so the main assertions are existence, valuation and cut-off.
Existence is best tested by external confirmation, which is a test of detail.
Valuation links to recoverability, tested through after-date receipts and ageing.
An analytical procedure compares relationships, such as receivable days against the prior year.

Answer: 1. Test of detail: send confirmation requests to a sample of customers and agree replies to the receivables ledger (existence). 2. Test of detail: inspect cash received after the year end for a sample of balances to confirm they are recoverable (valuation). 3. Test of detail: select a sample of sales invoices and goods despatched notes either side of the year end to check they are recorded in the correct period (cut-off). 4. Analytical procedure: compare receivable days and the allowance for doubtful debts with the prior year and with budget, and investigate unexpected differences (valuation).

Exam tips

Read the requirement word. "Tests of controls" and "substantive procedures" are marked separately, so mixing them loses marks.
Section C answers need clear, specific procedures. One point per procedure, each starting with an audit verb.
In OT questions, remember that tests of controls address control risk and substantive procedures address misstatement in the numbers.
Link your procedure to the scenario figures or facts where given, rather than giving a generic list.
Do not state that substantive procedures can be skipped for material balances.

Tests of Controls and Substantive Procedures: frequently asked questions

What is the difference between a test of control and a test of detail?

A test of control checks that a control operated effectively, such as inspecting invoices for approval. A test of detail is a substantive procedure that checks an individual transaction or balance, such as agreeing a receivable to a confirmation.

Are analytical procedures tests of controls?

No. Analytical procedures used as audit evidence at the testing stage are substantive procedures. They examine relationships between financial and other data rather than whether a control operated.

When do auditors use tests of controls?

Auditors use them when they plan to rely on controls to reduce substantive testing, or when substantive procedures alone cannot provide sufficient appropriate evidence. If controls are weak, the auditor usually relies mainly on substantive procedures.

How do I write substantive procedures in the ACCA AA exam?

Choose the assertion, then write a specific action: verb, the item or document examined, what it is compared to and the purpose. Label them as tests of detail or analytical procedures if the question asks.