The following questions deal with tests of controls. Choose the best response.
a. Which of the following statements about tests of controls is most accurate?
(1) Auditing procedures cannot concurrently provide both evidence of the effectiveness of internal control procedures and evidence required for substantive tests.
(2) Tests of controls include observations of the proper segregation of duties.
(3) Tests of controls provide direct evidence about monetary misstatements in transactions.
(4) Tests of controls ordinarily should be performed as of the balance sheet date or during the period subsequent to that date.
b. To support the auditor’s initial assessment of control risk below maximum, the auditor performs procedures to determine that internal controls are operating effectively.
Which of the following audit procedures is the auditor performing?
(1) Tests of details of balances
(2) Substantive tests of transactions
(3) Tests of controls
(4) Tests of trends and ratios
c. The primary objective of performing tests of controls is to obtain
(1) a reasonable degree of assurance that the client’s internal controls are operating effectively on a consistent basis throughout the year.
(2) sufficient, appropriate audit evidence to afford a reasonable basis for the auditor’s opinion, without the need for additional evidence.
(3) assurances that informative disclosures in the financial statements are reasonably adequate.
(4) knowledge and understanding of the client’s prescribed procedures and methods.
d. To test the effectiveness of controls, an auditor ordinarily selects from a variety of techniques, including
(1) analysis.
(2) confirmation.
(3) reperformance.
(4) comparison.
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