What are the five types of test auditors use to determine whether financial statements are fairly stated?

The five types of test auditors use to determine whether financial statements are fairly stated include the following: 1) risk assessment procedures 2) tests of controls 3) substantive tests of transactions 4) analytical procedures 5) tests of details of balances. while risk assessment procedures (procedures to gain an understanding of the entity and its environment, including internal control) help the financial statement auditor obtain information to make an initial assessment of control risk, tests of controls must be performed as support of an assessment of control risk that is below maximum.

The purpose of the tests of controls is to obtain evidence regarding the effectiveness of controls, which may allow the auditor to assess control risk below maximum. Ifcontrols are found to be effective and functioning, the substantive evidence may be reduced. substantive evidence is obtained to reduce detection risk. Substantive evidence includes evidence from the subtantive test of transactions, analytical procedures, and test of details of balances. For audits of internal control over financial reporting, the auditor only performs the first two types of audit tests: procedures to obtain an understanding of internal control and test of controls. because a public company auditor must issue a report on internal control over financial reporting, the extent of the auditor's tests of controls must be sufficient to issue an opinion about the operating effectiveness of those controls.