Fran has asked you to assist on the inventory working papers, but before you get started, you reviewed the working papers in Hillsburgs las-years audit file. You noted the following:

• Hardware stores can place their orders directly through the ONHAND system and that the system automatically generates a picklist that lists the ordered products and their location in the warehouse.
• Only part-time staff, who wear a grey uniform are allowed to gather the products listed on the pick list.
• Full time staff, who wear blue uniforms, are not allowed to gather any products, but are solely responsible for verifying that the part-time staff correctly gathers all the ordered products.
• Once the order is verified, the picklist is signed off by a full-time staff and filed.
• Once a month, one of the full-time staff is also responsible for counting all the high-value inventory items.
• The warehouse supervisor is supposed to do a recount to verify the count results and resolve any discrepancies. Once this is one, the supervisor signs off on the count sheets and they are filed.

She has asked you the following to clarify your understanding before conducting any work:

1. Explain the difference between substantive procedures and test of controls (4 marks)
2. Describe the difference among substantive tests of transactions, substantive analytical procedures, and substantive tests of balances. (6 marks)
3. Describe the process of designing and performing test of controls. (6 marks)
4. Suggest two tests of controls that you could conduct to test Hillsburgs inventory controls. (4 marks)