Para 2.1.23 — MSO

C. Direct substantive testing of transactions 2.1.23 Direct substantive tests are those tests of transactions and balances which seek to provide evidence as to the completeness, accuracy and validity of information in the accounting or financial statement. The testing involves examination of samples of transactions or account balances and is a form of inductive reasoning where the reasonableness of the aggregate results is inferred from the evidence of reliability of the individual details that have been tested. For example, if the auditor wants to test whether purchases have been made by following the established procedures and have been accounted for correctly in the records, he may test check some purchase transactions. If the transactions tested conform to procedures and have been correctly accounted for, the auditor can infer that purchase procedures have been adhered to.