No, all testing is down all the way down to 'reality'. But testing is statistically scaled to detect large errors. The threshold for 'large' shifts with how lar

No, all testing is down all the way down to 'reality'. But testing is statistically scaled to detect large errors. The threshold for 'large' shifts with how large the audited company is. i.e. a couple million dollars is a rounding error at Walmart. Additionally, pretty much 90% of an audit flows through a limited number of client contacts. Audits are not designed to defend against a concerted effort to prevent the auditors from seeing 'reality' (i.e. un-doctored documents), due to the manpower requirements to validate information at that level. Conceptually, it's the difference between 'I-trust-you-but-I-need-to-check-that-you-did-your-homework' and 'Trust no one, everything you see is a lie'.