Recruiter's Glossary

Examples: Adverse Opinion • Detection Risk • Ledger

Substantive Testing

Term from Auditing industry explained for recruiters

Substantive Testing is a fundamental approach used by auditors to check if a company's financial records are accurate and truthful. Think of it like a detective's investigation - auditors examine actual documents, receipts, and records to verify that the numbers reported are correct. This is different from just checking if processes are working (which is called internal control testing). Some people also call this "detailed testing" or "account balance testing." It's a crucial skill that employers look for when hiring auditors because it helps ensure financial statements can be trusted.

Examples in Resumes

Performed Substantive Testing procedures for accounts receivable totaling $50M

Led Substantive Tests of inventory counts across multiple warehouse locations

Developed efficient Substantive Testing programs that reduced audit time by 20%

Typical job title: "Auditors"

Also try searching for:

External Auditor Internal Auditor Financial Auditor Audit Associate Audit Senior Assurance Associate Audit Manager

Where to Find Auditors

Professional Organizations

Online Communities

Job Boards

Example Interview Questions

Senior Level Questions

Q: How do you determine the appropriate mix of substantive testing and controls testing for an audit?

Expected Answer: A senior auditor should explain how they assess risk factors, client size, and previous audit findings to create an efficient testing strategy. They should mention balancing time constraints with thorough coverage.

Q: How would you handle a situation where substantive testing reveals a material misstatement?

Expected Answer: Should discuss the process of documenting findings, expanding testing scope if needed, communicating with management, and determining impact on audit opinion.

Mid Level Questions

Q: What are the main types of substantive testing procedures you commonly use?

Expected Answer: Should mention vouching (checking documents), analytical procedures (comparing numbers), and confirmation (verifying with outside parties), with examples of when to use each.

Q: How do you determine sample sizes for substantive testing?

Expected Answer: Should explain basic sampling concepts, considering factors like materiality, risk assessment, and population size in deciding how many items to test.

Junior Level Questions

Q: What is the difference between substantive testing and control testing?

Expected Answer: Should explain that substantive testing looks at actual numbers and transactions, while control testing checks if the company's internal processes are working properly.

Q: What documents would you typically examine during substantive testing?

Expected Answer: Should list common documents like invoices, bank statements, receipts, and contracts, explaining why each is important.