What is the goal of substantive testing during an audit?

Substantive testing is a critical element of an audit, particularly in assessing the financial statements and related assertions. The primary goal of substantive testing is to confirm the accuracy and existence of financial data, which ensures that reported balances and transactions are valid, complete, and truthful. This type of testing often involves detailed inspections, recalculations, and confirmations from third parties to gather evidence that supports the financial position and results of operations of an entity.

By focusing on confirming the accuracy and existence of activities, auditors aim to identify any material misstatements in the financial statements, either due to error or fraud. This process helps to build confidence that the financial statements are free from significant misstatements that could affect users’ decisions.

Other options do play roles in the auditing process but do not align with the specific objective of substantive testing. For instance, verifying user access rights pertains more to internal controls and security rather than the accuracy of financial data. Evaluating the efficiency of transactions is related to operational audits and process improvements rather than substantive evidence of financial reporting. Improving compliance procedures is crucial for regulatory adherence but does not specifically address the verification of financial information in the context of substantive testing.