Tests of controls are audit procedures to test the operating effectiveness of control policies and procedures in support of a reduced assessed control risk. Auditors have the option to choose to rely on a client's system of controls when they are doing their auditing activities.
They provide the primary basis for a public company auditors report on internal controls over financial reporting. specific accounts affected by performing tests of controls for the acquisition and payment cycle include the following: cash, accounts payable, purchases, purchase returns and allowances, purchase discounts, manufacturing expenses, selling expenses, prepaid insurance, leasehold improvements, and various administrative expenses.
Tests of controls are audit procedures to test the operating effectiveness of control policies and procedures in support of a reduced assessed control risk. tests of controls provide the primary basis for a public company auditors report on internal controls over financial reporting. specific accounts affected by performing tests of controls for the acquisition and payment cycle include the following: cash, accounts payable, purchases, purchase returns and allowances, purchase discounts, manufacturing expenses, selling expenses, prepaid insurance, leasehold improvements, and various administrative expenses. (lo #13-1)
