ABREMA: audit sampling and testing: example: performance of audit procedures: control testing

Audit testing procedures

Example: performance of audit procedures: control testing

Following selection of the items for testing, the auditor performs the relevant audit procedure(s) on those items.

Depending on the type of control procedure that is the subject of the testing, the auditor may inspect documentation for evidence of the performance, usually by an employee of the entity, of a control procedure as an indication that the control procedure was performed in the manner planned and continuously throughout the period of intended reliance. If the control procedure was not so performed, then the auditor investigates further to determine whether the failure to properly perform the control has resulted in a misstatement.

In the example, the auditor inspects the RFC relating to each of the 35 credit advices selected, for evidence that the credit advices were approved on a timely basis by either of Beta or Gamma.

It is common for auditors to perform a "dual purpose test" during control testing. In other words, for the items selected, as well as performing a test of control, the auditor also performs the related substantive procedure. In the example, as well as gathering evidence relating to the approval of the credit advice, the auditor performs the planned substantive procedures relating to credit advice transactions. This may involve the auditor vouching details, say, on 50% of the credit advice forms selected, with supporting documentation, as evidence of the validity of the credit advice transaction. Whether or not further substantive evidence is gathered, depends on the results of the tests of control.

The next step is to perform a qualitative analysis of any exceptions noted.

Audit testing procedures, index page