Directional Testing??

[KayPee]

Anyone got some easy to understand notes on 'directional testing'?

[Suze]

Hi Kayee

There is a technical article written by Kim Smith in May 2001 on directional testing. Just click on the link. Hope it helps.

http://www.accaglobal.com/students/study_exams/qualifications/acca_choose/acca/fundamentals/aa/technical_articles/2945476

[Suze]

Directional testing: auditor tests for over- or understatement, not both Increases audit efficiency

* Misstatements are more likely to occur in one direction (assets and revenues overstated, liabilities and expenses understated)

*With directional testing, auditor uses procedures that focus on the most likely misstatements

*Vouching and reprocessing are examples of directional tests

*Can also provide evidence about complementary accounts

*Some management assertions are directional by nature (existence addresses overstatement; completeness, understatement)