Tests of Controls (2)

Question 1

What is inspection?

Answer 1

Inspection of documents supporting controls or events to gain audit evidence that controls have operated effectively

Question 2

What is observation?

Answer 2

Observation of entity’s control procedures

Question 3

What is reperformance?

Answer 3

Reperformance of the application of a control to ensure it was performed correctly

Question 4

What is examination?

Answer 4

Examination of evidence of management reviews

Question 5

What is testing?

Answer 5

Testing of the control activities performed by a computer

Question 6

Example of inspection?

Answer 6

Verifying that a transaction has been authorised

Question 7

Example of observation?

Answer 7

Observing an inventory count to ensure it is being conducted with inventory count instructions

Question 8

Example of reperformance?

Answer 8

Reperforming a bank reconciliation to verify that it has been done properly

Question 9

Example of examination?

Answer 9

Minutes of board meetings

Question 10

Example of testing?

Answer 10

Computer-assisted audit techniques (CAATs)