AUD 3 Internal Control 10 - 4 Flashcards

Question 1

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:

Step 1 – Obtain an understanding of the design of all 5 components of the entity’s internal control (CRIME) through the performance of risk assessment procedures.

Step 2 – Document the understanding of Internal Control.

Step 3 – Assess Risk of Material Misstatement (RMM) which consists of inherent risk (IR) and control risk (CR).
RMM = IR × CR

Step 4 – Develop an audit strategy to either:
o (RELY?)
Perform tests of control (TofC) to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or
o (NOT Rely)
Decide NOT to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.

Step 5 – Reassess Risk of Material Misstatement and evaluate results.
o For controls for which tests of controls were performed, evaluate results to reassess RMM and determine if it is appropriate to modify the nature, timing, and extent of further audit procedures.

Step 6 – Document conclusions and determine the effect on the planned substantive procedures. At this point, the audit program needs to be developed or revised for further audit procedures.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:

Step 1 – Obtain an understanding of the design of all 5 components of the entity’s internal control (CRIME) through the performance of risk assessment procedures.

Step 2 – Document the understanding of Internal Control.

Step 3 – Assess Risk of Material Misstatement (RMM) which consists of inherent risk (IR) and control risk (CR).
RMM = IR × CR

Step 4 – Develop an audit strategy to either:
o (RELY?)
Perform tests of control (TofC) to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or
o (NOT Rely)
Decide NOT to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.

Step 5 – Reassess Risk of Material Misstatement and evaluate results.
o For controls for which tests of controls were performed, evaluate results to reassess RMM and determine if it is appropriate to modify the nature, timing, and extent of further audit procedures.

Step 6 – Document conclusions and determine the effect on the planned substantive procedures. At this point, the audit program needs to be developed or revised for further audit procedures.

Question 2

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 – Develop an audit strategy to either:

       o (RELY?) 
           Perform tests of control (TofC) to determine if CR is below maximum, 
           reducing RMM below the level of IR and 
           allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or

       o (NOT Rely) 
           Decide NOT to perform tests of controls, 
           assessing CR at the maximum level as if the control did not exist, and 
           measuring RMM as being equal to IR.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 – Develop an audit strategy to either:

       o (RELY?) 
           Perform tests of control (TofC) to determine if CR is below maximum, 
           reducing RMM below the level of IR and 
           allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or

       o (NOT Rely) 
           Decide NOT to perform tests of controls, 
           assessing CR at the maximum level as if the control did not exist, and 
           measuring RMM as being equal to IR.

Question 3

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Str_______)

Develop an audit strategy to either:

• Perform tests of control to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide not to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Develop an audit strategy to either:

• Perform tests of control to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide not to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.

Question 4

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Develop an audit strategy to either:

• Perform t___s of co_____ to determine if CR is below maximum,
Reducing RMM below the level of IR and
Allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide NOT to perform t___s of con____s,
Assessing CR at the maximum level as if the control did not exist, and
Measuring RMM as being equal to IR.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Develop an audit strategy to either:

• Perform tests of control to determine if CR is below maximum,
Reducing RMM below the level of IR and
Allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide not to perform tests of controls,
Assessing CR at the maximum level as if the control did not exist, and
Measuring RMM as being equal to IR.

Question 5

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Develop an audit strategy to either:

• Perform tests of control to determine if CR is below maximum,
Re___ing RMM be___ the level of IR and
Allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide not to perform tests of controls,
Assessing CR at the maximum level as if the control did not exist, and
Measuring RMM as being eq___ to IR.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Develop an audit strategy to either:

• Perform tests of control to determine if CR is below maximum,
Reducing RMM below the level of IR and
Allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide not to perform tests of controls,
Assessing CR at the maximum level as if the control did not exist, and
Measuring RMM as being equal to IR.

Question 6

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:

Step 4 – Develop an audit strategy to either:

       o (RELY?) 
           Perform tests of control (TofC) to determine if CR is below maximum, 
            CR < 100%  or CR < 1.0
            RMM = IR x CR
            reducing RMM below the level of IR 
            RMM < IR
           and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

       o (NOT Rely) 
           Decide NOT to perform tests of controls, 
           assessing CR at the maximum level as if the control did not exist, 
            CR = 100%  or CR = 1.0
            RMM = IR x CR
            RMM = IR x 1.0
            RMM = IR
            and measuring RMM as being equal to IR.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:

Step 4 – Develop an audit strategy to either:

       o (RELY?) 
           Perform tests of control (TofC) to determine if CR is below maximum, 
            CR < 100%  or CR < 1.0
            RMM = IR x CR
            reducing RMM below the level of IR 
            RMM < IR
           and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

       o (NOT Rely) 
           Decide NOT to perform tests of controls, 
           assessing CR at the maximum level as if the control did not exist, 
            CR = 100%  or CR = 1.0
            RMM = IR x CR
            RMM = IR x 1.0
            RMM = IR
            and measuring RMM as being equal to IR.

Question 7

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Develop an audit strategy to either:

• Perform tests of control to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide not to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Develop an audit strategy to either:

• Perform tests of control to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests):

or

• Decide not to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.

Question 8

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effe________ss of the design and operation of a control (what is the substance?).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

Question 9

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the de____ and operation of a control (what is the substance?).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

Question 10

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and ope_______ of a control (what is the substance?).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

Question 11

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a co_____ (what is the substance?).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

Question 12

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the subs_______?).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

Question 13

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must con_____ how the control was applied, the consistency with which it was applied and by whom it was applied.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider how the control was applied, the consistency with which it was applied and by whom it was applied.

Question 14

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
h__ the control was applied,
the consistency with which it was applied
and by whom it was applied.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Question 15

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the con_______cy with which it was applied
and by whom it was applied.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Question 16

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by wh__ it was applied.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Question 17

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was ap___ed,
the consistency with which it was ap___ed
and by whom it was ap___ed.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Question 18

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor m___ consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Question 19

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Tests of co_____s generally consist of 4 types of procedures (RIIO).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider
how the control was applied,
the consistency with which it was applied
and by whom it was applied.

Tests of controls generally consist of 4 types of procedures (RIIO).

Question 20

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of pro______s (RIIO).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

Question 21

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o T___ing the Cycles for ARCC’s by doing RIIO

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o Testing the Cycles for ARCC’s by doing RIIO

Question 22

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o Testing the Cy___s for ARCC’s by doing RIIO

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o Testing the Cycles for ARCC’s by doing RIIO

Question 23

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o Testing the Cycles for ARCC’s by doing RIIO

There are 4 Procedures for t___ing controls (RIIO).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o Testing the Cycles for ARCC’s by doing RIIO

There are 4 Procedures for testing controls (RIIO).

Question 24

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o Testing the Cycles for ARCC’s by doing RIIO

There are 4 Pro______es for testing controls (RIIO).

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Tests of controls generally consist of 4 types of procedures (RIIO).

o Testing the Cycles for ARCC’s by doing RIIO

There are 4 Procedures for testing controls (RIIO).

Question 25

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing con____s (RIIO).

Reperformance
Inspection
Inquiry
Observation

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

Question 26

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperf_________
Inspection
Inquiry
Observation

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

Question 27

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Insp_______
Inquiry
Observation

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

Question 28

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inq____
Observation

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

Question 29

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Obs________

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

Question 30

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Reperformance
– The au_____ applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Question 31

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Reperformance
– The auditor applies the con____ that the client personnel presumably performed to determine if the procedure was performed properly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Question 32

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably per____ed to determine if the procedure was performed properly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Question 33

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed pr____ly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Question 34

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recal________, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

Question 35

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the s___ as that derived by the entity

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

Question 36

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-f__ting an invoice to make certain that amounts have been calculated correctly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

Question 37

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-footing an in____ to make certain that amounts have been calculated correctly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

Question 38

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-footing an invoice to make certain that amounts have been ca_______ed correctly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

Question 39

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-footing an invoice to make certain that amounts have been calculated cor____tly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity

or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

Question 40

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperf_________
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

Question 41

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Insp______
– The auditor examines controls, documents and reports that provide documentary evidence.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

Question 42

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inspection
– The auditor exa____s controls, documents and reports that provide documentary evidence.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

Question 43

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines con____, documents and reports that provide documentary evidence.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

Question 44

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and re____s that provide documentary evidence.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

Question 45

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, docu____s and reports that provide documentary evidence.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

Question 46

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evid____.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

Question 47

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example,
the auditor might examine pa__ invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example,
the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

Question 48

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example,
the auditor might examine paid invoices to make certain they have been properly can___led to avoid paying the same invoice more than once.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example,
the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

Question 49

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example,
the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than on__.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example,
the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

Question 50

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example, the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example, the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

Question 51

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inq____
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

Question 52

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inquiry
– The auditor asks client personnel involved in controls to state h__ effectively certain controls were enforced.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

Question 53

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inquiry
– The auditor asks client personnel involved in controls to state how ef________y certain controls were enforced.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

Question 54

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain con____s were enforced.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

Question 55

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example,
the auditor might ask the acc____ing personnel if they handled any cash or signed checks in the course of the year.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example,
the auditor might ask the accounting personnel if they handled any cash or signed checks in the course of the year.

Question 56

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example,
the auditor might ask the accounting personnel if they handled any ca__ or signed checks in the course of the year.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example,
the auditor might ask the accounting personnel if they handled any cash or signed checks in the course of the year.

Question 57

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example,
the auditor might ask the accounting personnel if they handled any cash or signed ch___s in the course of the year.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example,
the auditor might ask the accounting personnel if they handled any cash or signed checks in the course of the year.

Question 58

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example, the auditor might ask the accounting personnel if they handled any cash or signed checks in the course of the year.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example, the auditor might ask the accounting personnel if they handled any cash or signed checks in the course of the year.

Question 59

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Observation
– The auditor wa___es client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Question 60

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Obser_______
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Question 61

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their reg____ functions to see if they follow the controls that were designed and implemented.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Question 62

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they fol___ the controls that were designed and implemented.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Question 63

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were de____ed and implemented.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Question 64

Q

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and im_________ed.

Answer

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Answer 65

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

For example,
the auditor might observe the distribution of pay checks to see if appropriate procedures for verifying employees are being followed.

Answer 66

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

For example,
the auditor might observe the distribution of pay checks to see if appropriate procedures for verifying employees are being followed.

Answer 67

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

For example,
the auditor might observe the distribution of pay checks to see if appropriate procedures for verifying employees are being followed.

Answer 68

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

• Reperformance – The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

• Inspection – The auditor examines controls, documents and reports that provide documentary evidence.

For example, the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

• Inquiry – The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example, the auditor might ask the accounting personnel if they handled any cash or signed checks in the course of the year.

• Observation – The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

For example, the auditor might observe the distribution of pay checks to see if appropriate procedures for verifying employees are being followed.

Answer 69

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

Reperformance – The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.
Inspection – The auditor examines controls, documents and reports that provide documentary evidence.
Inquiry – The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.
Observation – The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

Answer 70

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

These different types of tests of controls can be very effective in determining if a system features appropriate segregation of duties.

Answer 71

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

These different types of tests of controls can be very effective in determining if a system features appropriate segregation of duties.

Answer 72

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

These different types of tests of controls can be very effective in determining if a system features appropriate segregation of duties.

In general, however, the most effective type of test of control is observation.

Answer 73

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

These different types of tests of controls can be very effective in determining if a system features appropriate segregation of duties.

In general, however, the most effective type of test of control is observation.

Answer 74

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

There are 4 Procedures for testing controls (RIIO).

Reperformance
Inspection
Inquiry
Observation

These different types of tests of controls can be very effective in determining if a system features appropriate segregation of duties.

In general, however, the most effective type of test of control is observation.

Answer 75

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

Answer 76

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

Answer 77

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

Answer 78

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

Answer 79

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

Answer 80

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

Answer 81

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

Answer 82

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

Answer 83

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis, applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

Answer 84

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis, applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

Answer 85

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis, applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

Answer 86

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis, applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor determines that, since sales personnel are highly incentivized by a liberal commission system,

they may be motivated to overstate sales reported to the company and, as a result, reported by the company.

Answer 87

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor determines that, since sales personnel are highly incentivized by a liberal commission system,

they may be motivated to overstate sales reported to the company and, as a result, reported by the company.

Answer 88

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor determines that, since sales personnel are highly incentivized by a liberal commission system,

they may be motivated to overstate sales reported to the company and, as a result, reported by the company.

Answer 89

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor determines that, since sales personnel are highly incentivized by a liberal commission system,

they may be motivated to overstate sales reported to the company and, as a result, reported by the company.

Answer 90

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The auditor determines that, since sales personnel are highly incentivized by a liberal commission system, they may be motivated to overstate sales reported to the company and, as a result, reported by the company.
The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.

Answer 91

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The auditor determines that, since sales personnel are highly incentivized by a liberal commission system, they may be motivated to overstate sales reported to the company and, as a result, reported by the company.
The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.

Answer 92

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The auditor determines that, since sales personnel are highly incentivized by a liberal commission system, they may be motivated to overstate sales reported to the company and, as a result, reported by the company.
The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.

Answer 93

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The auditor determines that, since sales personnel are highly incentivized by a liberal commission system, they may be motivated to overstate sales reported to the company and, as a result, reported by the company.
The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.

Answer 94

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The auditor determines that, since sales personnel are highly incentivized by a liberal commission system, they may be motivated to overstate sales reported to the company and, as a result, reported by the company.
The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.
The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

Answer 95

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.
The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

Answer 96

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.
The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

Answer 97

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.
The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

Answer 98

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.
The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

Answer 99

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.
The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

Answer 100

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

Answer 101

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

Answer 102

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

Answer 103

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

o Otherwise, the auditor will inquire as to whether management has considered the possibility and developed a separate control, of which the auditor is not yet aware, to deal with the issue.

Answer 104

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

o Otherwise, the auditor will inquire as to whether management has considered the possibility and developed a separate control, of which the auditor is not yet aware, to deal with the issue.

Answer 105

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

o Otherwise, the auditor will inquire as to whether management has considered the possibility and developed a separate control, of which the auditor is not yet aware, to deal with the issue.

Answer 106

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

o Otherwise, the auditor will inquire as to whether management has considered the possibility and developed a separate control, of which the auditor is not yet aware, to deal with the issue.

Answer 107

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

• The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.

o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.

o Otherwise, the auditor will inquire as to whether management has considered the possibility and developed a separate control, of which the auditor is not yet aware, to deal with the issue.

Answer 108

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

“What Could Go Wrong” analysis

For example,
the auditor may be evaluating the occurrence assertion in relation to sales.

The following may result:

The auditor determines that, since sales personnel are highly incentivized by a liberal commission system, they may be motivated to overstate sales reported to the company and, as a result, reported by the company.
The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.
The auditor will next try to determine if there are controls that would either prevent the recording of sales that did not occur or would cause them to be detected and corrected on a timely basis.o The controls may be built into the system, which the auditor can determine by reviewing the documented understanding.o Otherwise, the auditor will inquire as to whether management has considered the possibility and developed a separate control, of which the auditor is not yet aware, to deal with the issue.

Answer 109

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 110

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 111

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 112

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 113

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 114

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 115

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 116

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency,

determining if it is a significant deficiency or a material weakness and,

Answer 117

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency,

determining if it is a significant deficiency or a material weakness and,

Answer 118

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency,

determining if it is a significant deficiency or a material weakness and,

Answer 119

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency,

determining if it is a significant deficiency or a material weakness and,

Answer 120

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency,

determining if it is a significant deficiency or a material weakness and,

if so, make certain to include it in a communication to those charged with governance.

Answer 121

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency,

determining if it is a significant deficiency or a material weakness and,

if so, make certain to include it in a communication to those charged with governance.

Answer 122

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency, determining if it is a significant deficiency or a material weakness and,

if so, make certain to include it in a communication to those charged with governance.

Answer 123

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency, determining if it is a significant deficiency or a material weakness and, if so, make certain to include it in a communication to those charged with governance.

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

Answer 124

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

Answer 125

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

Answer 126

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

Answer 127

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

Answer 128

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.

Answer 129

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.

Answer 130

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.

Answer 131

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.

Answer 132

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.

Answer 133

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales

Answer 134

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales

Answer 135

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales
and trace them to supporting documentation to verify that they actually occurred.

Answer 136

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales
and trace them to supporting documentation to verify that they actually occurred.

Answer 137

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales
and trace them to supporting documentation to verify that they actually occurred.

Answer 138

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales
and trace them to supporting documentation to verify that they actually occurred.

Answer 139

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales
and trace them to supporting documentation to verify that they actually occurred.

Answer 140

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

• To test the assertion of occurrence,
the auditor will likely select a sample from the population of recorded sales
and trace them to supporting documentation to verify that they actually occurred.

Answer 141

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.
To test the assertion of occurrence, the auditor will likely select a sample from the population of recorded sales and trace them to supporting documentation to verify that they actually occurred.

Answer 142

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented, the auditor would likely conclude that a control deficiency has been identified.

The auditor will evaluate the control deficiency, determining if it is a significant deficiency or a material weakness and, if so, make certain to include it in a communication to those charged with governance.

In addition, however, the auditor will evaluate what further audit procedures will provide evidence that recorded sales did actually occur.

The auditor will develop an audit program with procedures designed to verify that the information reported on the financial statements is correct.
To test the assertion of occurrence, the auditor will likely select a sample from the population of recorded sales and trace them to supporting documentation to verify that they actually occurred.

Answer 143

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

Answer 144

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

Answer 145

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

Answer 146

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

Answer 147

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

Answer 148

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

Answer 149

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

Answer 150

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

Answer 151

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls

and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

Answer 152

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

Answer 153

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

If, however, the control is expected to be effective,

the auditor will perform some form of walk through involving
observing the control,
inspecting documents, or
performing analytical procedures.

Answer 154

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

If, however, the control is expected to be effective,

the auditor will perform some form of walk through involving
observing the control,
inspecting documents, or
performing analytical procedures.

Answer 155

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If, however, the control is expected to be effective,

the auditor will perform some form of walk through involving
observing the control,
inspecting documents, or
performing analytical procedures.

Answer 156

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If, however, the control is expected to be effective,

the auditor will perform some form of walk through involving
observing the control,
inspecting documents, or
performing analytical procedures.

Answer 157

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls and make a determination as to whether the design is suitable and if the control is likely to be effective.

If not, the auditor will not attempt to verify that the control has been implemented as it is irrelevant.

If, however, the control is expected to be effective, the auditor will perform some form of walk through involving observing the control, inspecting documents, or performing analytical procedures.

Answer 158

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

Not to Rely
• The auditor may decide Not to Rely on the controls related to a relevant assertion.

Rely
• The auditor may decide to Rely on the controls related to the relevant assertion.

Answer 159

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

Answer 160

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

Answer 161

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

Answer 162

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

Answer 163

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

Answer 164

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o The auditor will develop a program to test the assertion

Answer 165

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o The auditor will develop a program to test the assertion by applying substantive audit procedures

Answer 166

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o The auditor will develop a program to test the assertion by applying substantive audit procedures that the auditor believes will provide sufficient appropriate audit evidence.

Answer 167

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o The auditor will develop a program to test the assertion by applying substantive audit procedures that the auditor believes will provide sufficient appropriate audit evidence.

Answer 168

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o The auditor will develop a program to test the assertion by applying substantive audit procedures that the auditor believes will provide sufficient appropriate audit evidence.

Answer 169

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

o The auditor will develop a program to test the assertion by applying substantive audit procedures that the auditor believes will provide sufficient appropriate audit evidence.

Answer 170

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o RMM will be reduced from IR, taking into account the effect of CR being below the maximum.

Answer 171

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o RMM will be reduced from IR, taking into account the effect of CR being below the maximum.

Answer 172

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o RMM will be reduced from IR, taking into account the effect of CR being below the maximum.

Answer 173

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o RMM will be reduced from IR, taking into account the effect of CR being below the maximum.

Answer 174

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o The auditor will perform tests of the controls

Answer 175

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o The auditor will perform tests of the controls selecting from a population that covers the entire period during which the auditor is anticipating that the controls were in place.

Answer 176

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o The auditor will perform tests of the controls selecting from a population that covers the entire period during which the auditor is anticipating that the controls were in place.

Answer 177

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o The auditor will perform tests of the controls selecting from a population that covers the entire period during which the auditor is anticipating that the controls were in place.

Answer 178

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

• The auditor may decide to Rely on the controls related to the relevant assertion.

o RMM will be reduced from IR, taking into account the effect of CR being below the maximum.

o The auditor will perform tests of the controls selecting from a population that covers the entire period during which the auditor is anticipating that the controls were in place.

Answer 179

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will then determine an audit strategy:

NOT RELY
• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

o The auditor will develop a program to test the assertion by applying substantive audit procedures that the auditor believes will provide sufficient appropriate audit evidence.

RELY
• The auditor may decide to Rely on the controls related to the relevant assertion.

o RMM will be reduced from IR, taking into account the effect of CR being below the maximum.

o The auditor will perform tests of the controls selecting from a population that covers the entire period during which the auditor is anticipating that the controls were in place.

Answer 180

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits

Answer 181

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits

and the controls have not changed since they were last tested,

Answer 182

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits

and the controls have not changed since they were last tested,

Answer 183

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits

and the controls have not changed since they were last tested,

the auditor should test the operating effectiveness of such controls at least once in every 3 years.

Answer 184

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits

and the controls have not changed since they were last tested,

the auditor should test the operating effectiveness of such controls at least once in every 3 years.

Answer 185

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits

and the controls have not changed since they were last tested,

the auditor should test the operating effectiveness of such controls at least once in every 3 years.

Answer 186

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits and the controls have not changed since they were last tested,

the auditor should test the operating effectiveness of such controls at least once in every 3 years.

Answer 187

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits and the controls have not changed since they were last tested,

the auditor should test the operating effectiveness of such controls at least once in every 3 years.

The auditor will determine that controls have not changed since they were last tested through the performance of risk assessment procedures.

Answer 188

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will determine that controls have not changed since they were last tested through the performance of risk assessment procedures.

Answer 189

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will determine that controls have not changed since they were last tested through the performance of risk assessment procedures.

Answer 190

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

The auditor will determine that controls have not changed since they were last tested through the performance of risk assessment procedures.

Answer 191

A

Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)

Step 4 –
4. Tests of Controls (Develop an Audit Strategy)

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits and the controls have not changed since they were last tested,

the auditor should test the operating effectiveness of such controls at least once in every 3 years.

The auditor will determine that controls have not changed since they were last tested through the performance of risk assessment procedures.

Answer 192

A

Why an auditor need to perform tests of control?

To determine if control risk (CR) is below maximum

Answer 193

A

Why an auditor need to perform tests of control?

To determine if control risk (CR) is below maximum

Answer 194

A

Why an auditor need to perform tests of control?

To determine if control risk (CR) is below maximum

Answer 195

A

If the control did not exist, or auditor assessing CR at the maximum level, will tests of controls needed to be performed?

No

Develop an audit strategy to

• Decide not to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.

Answer 196

A

An auditor decide not to perform tests of controls

and assessing CR at the maximum level

Answer 197

A

What does the auditor must consider in order to test the effectiveness of the design and operation of a control?

The auditor must consider

How the control was applied,
The consistency with which it was applied
By whom it was applied to

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider how the control was applied, the consistency with which it was applied and by whom it was applied.

Answer 198

A

What does the auditor must consider in order to test the effectiveness of the design and operation of a control?

The auditor must consider

How the control was applied,
The consistency with which it was applied
By whom it was applied to

To test the effectiveness of the design and operation of a control (what is the substance?).

The auditor must consider how the control was applied, the consistency with which it was applied and by whom it was applied.

Answer 199

A

What are the 4 procedures for testing controls?

RIIO

Reperformance
Inspection
Inquiry
Observation

Answer 200

A

What are the 4 procedures for testing controls?

RIIO

Reperformance
Inspection
Inquiry
Observation

Answer 201

A

• Reperformance
– The auditor applies the control that the client personnel presumably performed to determine if the procedure was performed properly.

Reperformance, which also includes recalculation, may involve the auditor performing a reconciliation to determine if the result is the same as that derived by the entity or may involve re-footing an invoice to make certain that amounts have been calculated correctly.

Answer 202

A

• Inspection
– The auditor examines controls, documents and reports that provide documentary evidence.

For example,
the auditor might examine paid invoices to make certain they have been properly cancelled to avoid paying the same invoice more than once.

Answer 203

A

• Inquiry
– The auditor asks client personnel involved in controls to state how effectively certain controls were enforced.

For example,
the auditor might ask the accounting personnel if they handled any cash or signed checks in the course of the year.

Answer 204

A

• Observation
– The auditor watches client personnel performing their regular functions to see if they follow the controls that were designed and implemented.

For example,
the auditor might observe the distribution of pay checks to see if appropriate procedures for verifying employees are being followed.

Answer 205

A

observation

In general, the most effective type of test of control in determining if a system features appropriate segregation of duties is observation.

Answer 206

A

Items susceptible to misstatement due to error or fraud are generally identified by applying a “What Could Go Wrong” analysis,

applied at the assertion level and taking into consideration the auditor’s understanding of the entity’s internal control.

For example, the auditor may be evaluating the occurrence assertion in relation to sales.

• The response to the auditor’s question: “What could go wrong?” is that sales personnel may submit paperwork for sales that did not actually occur.

Answer 207

A

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 208

A

If there are not controls to deal with the issue that are either built into the system or have been separately developed and implemented,

the auditor would likely conclude that a control deficiency has been identified.

Answer 209

A

The auditor will evaluate the control deficiency, determining if it is

1) a significant deficiency
or
2) a material weakness

and, if so, make certain to include it in a communication to those charged with governance.

Answer 210

A

If there are controls intended to deal with the issue, the auditor will

1) evaluate the design of the controls
and
2) make a determination as to

whether the design is suitable and if the control is likely to be effective.

Answer 211

A

If there are controls intended to deal with the issue, the auditor will

1) evaluate the design of the controls
and
2) make a determination as to

whether the design is suitable and if the control is likely to be effective.

Answer 212

A

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls and make a determination as to

whether the design is suitable and if the control is likely to be effective.

Answer 213

A

If there are controls intended to deal with the issue, the auditor will evaluate the design of the controls and make a determination as to

whether the design is suitable and if the control is likely to be effective.

Answer 214

A

If the control is expected to be effective, the auditor will perform some form of walk through involving observing the control, inspecting documents, or performing analytical procedures.

Answer 215

A

If the control is expected to be effective, the auditor will perform some form of walk through involving observing the control, inspecting documents, or performing analytical procedures.

Answer 216

A

If the control is expected to be effective, the auditor will perform some form of walk through involving observing the control, inspecting documents, or performing analytical procedures.

Answer 217

A

If the auditor plans to use audit evidence about the operating effectiveness of controls obtained in prior audits and the controls have not changed since they were last tested,

the auditor should test the operating effectiveness of such controls at least once in every 3 years.

Answer 218

A

The auditor will determine that controls have not changed since they were last tested through the performance of risk assessment procedures.

Answer 219

A

The auditor will determine that controls have not changed since they were last tested through the performance of risk assessment procedures.

Answer 220

A

If the control is expected to be effective, the auditor will perform some form of walk through involving

observing the control,
inspecting documents, or
performing analytical procedures.

Answer 221

A

If the control is expected to be effective, the auditor will perform some form of walk through involving

observing the control,
inspecting documents, or
performing analytical procedures.

Answer 222

A

Does this mean the auditor decide to rely or not rely on the internal controls?

Answer: Not to Rely

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

o The auditor will develop a program to test the assertion by applying substantive audit procedures that the auditor believes will provide sufficient appropriate audit evidence.

Answer 223

A

Does this mean are there relevant internal controls in place?

Answer: No relevant controls in place

• The auditor may decide Not to Rely on the controls related to a relevant assertion.

o RMM will be equal to the assertion’s inherent risk under the assumption that there are no relevant controls in place.

o The auditor will develop a program to test the assertion by applying substantive audit procedures that the auditor believes will provide sufficient appropriate audit evidence.

Answer 224

A

Does this mean the auditor decide to rely or not rely on the internal controls?

Answer: The auditor may decide to Rely on the controls

• The auditor may decide to Rely on the controls related to the relevant assertion.

o RMM will be reduced from IR, taking into account the effect of CR being below the maximum.

o The auditor will perform tests of the controls selecting from a population that covers the entire period during which the auditor is anticipating that the controls were in place.