Tests of details definition
/What are Tests of Details?
Tests of details are used by auditors to collect evidence that the balances, disclosures , and underlying transactions associated with a client's financial statements are correct. They are used to determine whether the financial data that rolls up into a client’s financial statements are correct. The main objectives of tests of details are as follows:
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Account balance verification . The auditor verifies that the ending balances in a client’s accounts are accurate.
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Disclosure review . The auditor examines the footnotes that a client has written to accompany its financial statements, to determine whether they are accurate and complete, and conform to the requirements of the applicable accounting framework.
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Transaction validation . The auditor investigates whether the transactions recorded by a client have actually occurred, and that they have been recorded both accurately and completely.
As an example of a test of details, an auditor tests the prepaid expenses asset account by examining each of the prepaid expenses that comprise the ending prepaid expenses balance.