Substantive tests of costs and expenses that are always performed include:
A) reviewing interim financial reports and investigating fluctuations or the absence of expected changes.
B) comparing the current year's expenses to the prior years actual and the current years budgeted amounts.
C) obtaining detailed analysis of selected costs and expense accounts and trace the details to the source data.
D) All of the above

Question

Quizplus · Accepted Answer

All of the above options are substantive tests of costs and expenses that are always performed as they provide assurance over the completeness, accuracy, and validity of the reported expenses. Reviewing interim financial reports and investigating fluctuations help in identifying any unusual transactions that may require further investigation, while comparing current year's expenses with the prior year's actual and current year's budgeted amounts helps in identifying significant variances that may require explanations. Obtaining detailed analysis of selected costs and expense accounts and tracing the details to the source data helps in ensuring that the expenses are valid and accurately recorded.

Substantive Tests of Costs and Expenses That Are Always Performed