The stages in audit testing are:
1. Internal control evaluations which will be followed by.
2. Compliance testing which gives satisfaction to some extent on the reliability of the records and the controls. This will be followed by:-
3. An overall analytical review designed to expose apparent inconsistencies and abnormalities in the financial statements and the underlying records. These three help us determine the extent of substantive testing. Substantive testing consists of tests that are designed to substantiate the completeness, accuracy and validity of information contained in the accounting records and financial statements. They consist of:
a) detailed analytical review which is designed to help locate material mis-statements in the accounts by comparing transactions and balances with related items both for the same period and for previous periods.
b) tests of detail which consist of transaction testing and balance testing and are designed to substantiate individual items in the accounts and so gain assurance either about the validity of similar transactions or about the details that underlie the various accounts balances. Test of details consist of transaction testing which is achieved by vouching whereby vouching is defined as proving the authenticity of a recorded transaction, the checking of casts and cross casts, checking of postings and reconciliations. Balance testing is achieved by direct confirmation and the physical inspection, all these give the necessary confidence for the auditor to express an opinion on the accounts.