Evidence and assertions
The Substantive Design
Match the procedure to the risk: significant risks need tests of details, not analytics alone.
How the exam words it
- -The stem sets a risk level and asks which substantive approach fits.
- -It involves a significant risk such as revenue recognition.
- -It performs interim testing and asks what the year-end requires.
- -It asks whether analytics or inquiry alone is enough.
The playbook
- 1For a significant risk, perform tests of details, substantive analytics alone are not sufficient and inquiry alone never is.
- 2Design procedures around the risky assertion, revenue occurrence gets cutoff testing, vouching, and confirmation.
- 3After interim testing, cover the remaining period to year-end with additional substantive work.
The trap
Relying on substantive analytics alone for a significant risk. Significant risks demand tests of details.
How the exam varies it
The same pattern, re-skinned along these axes:
Which risk level and assertionAnalytics, tests of details, or inquiryInterim versus year-end timing
Drill this pattern
8 questions of The Substantive Design from across the AUD topics. Clear it by getting 5 right with a streak of 3.