Tests of Controls (1)

Question 1

What must an auditor have an understanding of?

Answer 1

An entity’s accounting and internal control systems

Question 2

When will the auditor only ever carry out tests of controls?

Answer 2

If their initial risk assessment suggests that the entity’s internal controls operate effectively

Question 3

Why is the tests of controls done?

Answer 3

To gather audit evidence about relevant financial statement assertions

Question 4

What must the auditor test in a control?

Answer 4

is properly designed
Exists
Has operated throughout the period

Question 5

How should failures of internal controls (or deviations) should be dealt with?

Answer 5

Recorded and investigated regardless of the monetary amonut involved

Question 6

What must auditor assess?

Answer 6

Whether deviations are isolated departures or indicate existence of errors in accounting records

Question 7

What if the results of the tests of control are unsatisfactory?

Answer 7

Auditor’s preliminary assessment of control risk is not supported and auditor must perform extensive substantive procedures