Substantive tests of balances performed before year-end provide significant assurance and are normally only done when internal controls are ineffective.

Question

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Substantive tests of balances are typically performed after year-end financial statements have been prepared and are intended to provide assurance about the completeness, accuracy, and validity of account balances. These tests may be necessary even when internal controls are effective or deemed reliable, as they may uncover errors or irregularities that were not detected by controls.

Substantive Tests of Balances Performed Before Year-End Provide Significant Assurance