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:

Account balance verification. The auditor verifies that the ending balances in a client’s accounts are accurate.
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.
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.