Section 3: 30–40%A9

Substantive Procedures

Exam insight

Section 3 is 30-40% of the AUD exam, the heaviest section, and substantive procedures are its backbone. The mistake the question fishes for is reversing the direction of testing. Vouching tests existence, tracing tests completeness, and the two get swapped 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.

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

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

Vouch or TraceDirection is the whole game: vouch back for existence, trace forward for completeness.The Substantive DesignMatch the procedure to the risk: significant risks need tests of details, not analytics alone.The Confirmation PlayPositive or negative depends on risk and balance size, and non-responses trigger a fixed next step.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.