Factors should be considered for designing Test of Control
Test of controls are auditing procedure performed to determine the effectiveness of the design and the operational structure policies and procedures. Test of control is auditing procedures performed to determine the effectiveness of the design or the operation of control structure policies and procedures. Test of controls pertaining to designate concerned with whether the policy or procedure is suitably designed to prevent or detect a material misstatement in a specific financial statement assertion.
Designing tests of control: The factors involved in designing tests of control are;
Nature of test: The auditor’s choices as to the nature of test of control are:
- Inquiring of personnel concerning the performance of their duties.
- Observing the personnel in the performance of their duties.
- Inspecting document and reports indicating the performance of control.
- Re-performing the control In the auditor.
In performing the tests, the auditor selects the procedure that will provide the most reliable evidence about the effectiveness of the control policy or procedure. Test of control is always applicable or equally effective in providing evidence.
The timing of the test of controls refers to when they are performed and the part of the accounting period to white they relate. An additional test of control is performed during interim work, which may be several moods before the end of the year under audit. These tests, therefore, only provide evidence of the effectiveness of control forms the beginning of the year to the date of the date of the tests.
The extent of the test:
The extent of the test of control is directly affected by the auditor’s planned assessed level of control risk. More extensive testing will be needed for a low assessed level of risk than for a moderate assessed level of control risk. The extent of additional testing will also be affected by the intended use of endows about the effectiveness of prior audits.