Auditors perform 3 general types of tests: (1) risk assessment tests, (2) tests of controls, and (3) substantive procedures. Risk assessment tests focus on understanding the risk of material misstatement. Tests of controls are designed to assess whether the client's internal controls are effective - in particular, whether the internal controls would prevent a material misstatement, or detect and correct a material misstatement. Substantive procedures are used to detect material misstatements, and can be grouped into two categories: (1) tests of details (tests of transactions and tests of ending balances) and (2) substantive analytical procedures. -
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