Test of Details: Definition, Procedures, Examples, and More

When it comes to audit evidence, there are two ways that auditors obtain assurance related to it. The first way is through the test of controls of a client. Auditors design tests of controls to evaluate the operating effectiveness of controls of a client that it uses in the prevention or detection of misstatements. Similarly, the test of controls contains an evaluation of how any misstatements the client rectifies after detection. In simpler words, the test of controls is a procedure through the use of which auditors can evaluate the internal controls in place at a client. Tests of controls may require auditors to apply different types of audit procedures.

The other way in which auditors can obtain audit evidence is through the use of substantive procedures. They design substantive procedures to detect the material misstatement of a client at an assertion level. Therefore, substantive procedures related to the assertions used in the preparation of the financial statements. It is different from the test of controls in that regard. There are two types of substantive procedures at the disposal of auditors out of which the first one is the test of details while the other is substantive analytical procedures. Both of these are different from each other.

What is the Test of Details?

Test of details is a process that auditors use to verify the details of individual transactions or balances. It is the testing that auditors use to collect audit evidence related to all the balances and transactions associated with the preparation of financial statements. Usually, auditors select a sample of transactions or balances that they test the details for and determine whether the details match the transaction recorded in the accounts of a company.

According to ‘ISA 330 – The Auditor’s Responses to Assessed Risks’, it is for the auditor to determine whether performing only substantive analytical procedures is sufficient to reduce the audit risk to an acceptably low level. Similarly, if the auditors deem necessary, they may only use tests of details if it results in the minimization of audit risks. Therefore, auditors must use their judgment to decide between tests of details vs substantive testing. Auditors may also use a combination of both, according to the standard. Practically, auditors use both tests of details and substantive analytical procedures.

The ISA, however, fails to set a definition for tests of details or explain how to perform these. That is because there is no set standard for tests of details as it depends on various factors. These factors depend on the client’s information, and the items auditors are testing. Therefore, for every audit assignment and account in the financial statements, the test of details will differ.

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Procedures to Perform Test of Details

As mentioned above, the procedures to perform tests of details vary from one client to another. However, some procedures that auditors carry out during tests of details include the following.

1. Vouching

One of the main ways in which auditors perform tests of details audit procedure is vouching. Vouching is the process of examining the source documents of transactions to ensure that they support the transactions in the accounts of a company. For example, an auditor can verify the sale invoice of a sale transaction to ensure the document matches the details of the transactions. While performing vouching, the goal of auditors is to identify any misstatements in the translation of the source document into the accounting system.

2. Tracing

While vouching requires auditors to select a transaction and check its source documents, tracing is the other way round. In tracing, auditors need to select a source document and follow it in the accounting system until it reaches the financial statements. Tracing involves auditors picking a sample of source documents and using their identifier numbers to check if they exist in the accounting system of the company. For example, auditors can choose some purchase invoices and ensure they are posted in the purchase ledgers and financial statements of the client.

3. Confirmations

Confirmations, also known as circularizations, are also a part of the test of details that auditors perform. Auditors send confirmations to different third-parties, related to the client, to confirm their balances. These parties may include banks, debtors, and creditors. Similarly, confirmations are one of the most common and effective pieces of audit evidence that auditors can obtain. Using confirmations, auditors can also ask the party for other details. For example, auditors use bank confirmations to inquire banks about accrued expenses or loan accounts, etc.

4. Examining Contracts

Another test of details audit procedure that auditors can use as a part of tests of details includes checking contracts or agreements to identify the terms of the contract. Examining agreements can also give auditors an idea of what the expected balances or transactions related to it should be. For example, auditors can review loan agreements to verify the closing balance of a loan for a specific accounting period. Examining contracts can also help auditors in the recalculation of transactions based on the contract, for instance, interest charges.

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5. Other procedures

Auditors can also use other procedures for tests of details. These may include testing the bank reconciliations produced by the client to check for any discrepancies. Similarly, it can consist of checking unrecorded liabilities in the accounts payable balance of a company. Furthermore, it can include reconciling payroll in the general ledger with tax returns. The goal with tests of details in these circumstances isn’t to check controls but to verify details.

Example of Test of Details

An audit firm looking to perform tests of details on the sales transactions of a company, ABC Co., must use the following procedures.

  • Obtain a sample of sale transactions from the sale ledger of ABC Co. and check their supporting documents, which includes sales invoices, goods delivery notes, gate passes, etc. In this case, the goal of the auditor isn’t to confirm these documents exist but rather to confirm that they match with each other and with the related financial information.
  • Obtain a sample of sale invoices and follow them to the accounts and, ultimately, the financial statements of ABC Co. As discussed above, this process is known as tracing.

The sales transactions of ABC Co. may also have a relationship with its accounts receivable balances. Therefore, auditors must also perform tests of details on those balances. Some test of details that auditors can use on accounts receivable includes the following.

  • Send confirmation to a sample of receivable balances. Confirmations can help determine whether these balances exist and whether the related sales transactions are reliable. Auditors may also need to verify receipts from receivable accounts using bank statements.
  • Check contracts, if any, with those balances. If there is a contract that the client has made with accounts receivable parties, auditors can also confirm the balance from there.

Test of Details vs Analytical Procedures

The test of details is different from analytical procedures due to various reasons. First of all, tests of details look at the supporting documents of a transaction or balance. It may include inspecting the sales invoice of a particular transaction to verify details such as amount, date, party, classification, etc. Auditors can also use a sample of transactions for which they can perform tests of controls. Based on the sample, they can form an opinion about whether the rest of the population is reliable as well.

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On the other hand, an analytical procedure does not look at the source documents of a transaction or balance. Instead, auditors use analytical procedures to assess the reasonableness of an amount. For example, auditors can calculate the percentage of change in the sales of the client and compare it with its last year’s sales. Then the auditor can determine whether the difference is explainable through changes in other parts of the financial statements or environmental factors.

Similarly, while the test of details checks the individual transactions inside a total amount, analytical procedures focus on the total amount instead. Analytical procedures cannot help auditors identify any misstatements within the total population, which test of details can. That is because analytical procedures do not explore the population at all.

Which methods auditors choose and use, depends on several factors. Practically, however, auditors combine both of these procedures for maximum effect. Similarly, auditors only use analytical procedures when the test of controls and risks associated with the audit assignment is determined to be low. When the risks are higher, or the internal controls of the client are not reliable, they must perform tests of details.


Auditors use different methods to obtain sufficient appropriate audit evidence related to an audit assignment. To gather this evidence, auditors can use two methods, which include tests of controls and substantive procedures. Test of details is a type of substantive procedures that auditors use to verify details of individual transactions. There are many types of tests of details that auditors can use, including vouching, tracing, confirmations, checking contracts, etc. The test of details is also different from analytical procedures. Auditors must determine which procedure is better based on the nature of the client and the risks associated with the assignment. 

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