The actual operation of an internal control system may be most objectively evaluated by:
A) completing a questionnaire and flowchart related to the accounting system in the year under audit.
B) substantive tests of accounts balances based on the auditor's assessment of internal control strength.
C) selection of items processed by the system and determination of the presence or absence of errors and control test deviations.
D) review of the previous year's audit work papers to update the report of internal control evaluation.

Question

Quizplus · Accepted Answer

The most objective evaluation of an internal control system would involve testing the system in action by selecting items processed by the system and determining the presence or absence of errors and control test deviations. This allows the auditor to directly observe the effectiveness of the internal control system rather than relying solely on questionnaires, flowcharts, or the results of previous audits. Substantive tests and reviewing previous audit work papers may provide some insight into the strength of internal controls, but they do not provide a direct evaluation of the current system in action.

The Actual Operation of an Internal Control System May Be