Footnote
In practice, auditors may gather evidence of
the overall completeness, validity and accuracy of each material account balance assertion (which is another way of saying that auditors make a final evaluation of audit risk at the account balance assertion level) and evaluate any exceptions found. (In substantive testing, an exception
is evidence that is inconsistent with an assertion and is referred to as a misstatement.) Then, if the auditor
considers that an account balance assertion is misstated (in other words, if audit risk is not acceptable) the auditor discusses the misstatement with
management. If management declines to alter the accounting records
and the auditor rejects management's explanation for not correcting
each misstatement, then the auditor includes the misstatements on a
Schedule of Audit Differences. This schedule is considered in its
entirety during the opinion formulation stage of the audit.