The Process of Designing and Performing Test of Controls
The procedure to test the effectiveness of controls in support of a reduced assessed control risk is called tests of controls. A test of controls is an audit procedure to test the effectiveness of a control used by a client entity to prevent or detect material misstatements. It is an audit test to test the effectiveness of the client’s internal controls system. Four types of procedure are used to support the operational internal control they are as follows –
Make Inquiries of appropriate client personnel: Although the inquiry is not generally a strong search of evidence about the effective operation of the control. It is an appropriate form of evidence.
Examine documents, records, and reports: The auditor examines the documents to make sure that they are complete and properly matched and that required signature or initials are present.
Observe control related activities: Other types of control related activities do not leave an evidential trail.
Reperform client procedures: There are also control related activities for which the related documents and records.