Substantive testing provides direct evidence about financial statement amounts and disclosures rather than relying solely on internal controls. Auditors perform analytical procedures, test transaction details, verify existence of assets, and confirm balances with third parties. The extent of substantive testing increases when control testing reveals weaknesses. Tests may be performed at interim periods or year-end depending on risk assessment. During an inventory audit, substantive tests included physical observation, price testing to supplier invoices, and recalculation of valuation methods to verify the $45 million reported balance.