Directional testing
Directional testing selects the direction of testing according to the misstatement risk and assertion. Tracing from source documents to accounting records can help test completeness; vouching recorded items back to evidence can help test occurrence or existence. The direction and population must match the audit objective.
Worked example
To test whether expenses are complete, trace a sample of supplier invoices and post-year-end payments to the payables records.
Common mistake
Testing only recorded payables for supporting invoices does not by itself identify all omitted liabilities.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Supporting | September 2026–June 2027 |