Tests of detail
Auditors use the term "tests of detail" to describe a collection of certain
evidence-gathering activities auditors perform during the substantive
stage of the audit that have as their objective the gathering of
substantive evidence (i.e. evidence relating to the completeness,
validity and/or accuracy of individual account balances and
underlying classes of transactions).
Although auditors perform some of the following activities
during other audit stages, it is only where auditors perform them in
the substantive testing stage to gather substantive evidence, that
they are referred to as "tests of detail". Tests of detail include
the following activities:
- vouching of information relating
to an account balance or class of transaction by the auditor with supporting
documentation. Vouching is used to provide evidence of the completeness, validity and accuracy of account balances and underlying classes of transaction.
- physical examination by the auditor of
physical assets. Physical examination is mainly used to provide evidence of the validity of account balances, but is also used to gather evidence relating to completeness.
- confirmation by the auditor of the existence
of an asset/liability/equity or the occurrence of a
transaction. Existence is evidence relating to the validity of the account balance/class of transaction.
- recalculation by the auditor of a total, spread sheet,
reconciliation, etc.. Recalculation provides evidence of the accuracy [of valuation] of account balances and underlying classes of transaction.
- inquiry by the auditor of employees of the
client. This gathers the least reliable form of audit evidence.
- cut-off tests relating to
either or both of the completeness and/or validity of account
balances and/or classes of transactions.
Tests of detail generally provide more reliable audit evidence than the
other category of substantive procedures,
analytical procedures.
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