Tests of controls are conducted to establish that:
A) controls operate consistently throughout the period.
B) there are no material misstatements in the financial statements.
C) controls operate effectively.
D) both a and c

Question

Quizplus · Accepted Answer

Tests of controls are conducted to establish that controls operate consistently throughout the period (a) and that they operate effectively (c). The purpose is to gain assurance that the controls are reliable, and therefore are effective in preventing or detecting material misstatements in the financial statements. So, both a and c are correct. B is incorrect because tests of controls do not directly test for material misstatements in the financial statements.

Tests of Controls Are Conducted to Establish That