Day: October 31, 2025

The two types of procedures used in gathering evidence are A – tests of controls and B – substantive procedures.

For each of the three examples below, select the type of procedure being illustrated: A – tests of controls or B – substantive procedures.

Example 1 – Observation of opening the post
Example 2 – Calculation of the gross profit margin and comparison with that of the previous accounting period
Example 3 – Reviewing invoices paid for evidence of authorisation

Select ONE answer:

1. Example 1. B and Example 2. B and Example 3. A
2. Example 1. A and Example 2. B and Example 3. A
3. Example 1. A and Example 2. A and Example 3. B
4. Example 1. B and Example 2. A and Example 3. B

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct => Observing the opening of the post is a test of control as it is the observation of a control taking place. Calculation of the gross profit margin and comparison with that of the previous accounting period is an analytical procedure (which is, in turn, a substantive procedure). Reviewing for authorisation is also testing that a control has been applied.
3. Not correct
4. Not correct

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