The auditor selects several transactions in each functional area and traces them through the entire accounting system,paying special attention to evidence about whether or not the control features are in operation.This is an example of a
A)sequence test.
B)test of controls.
C)substantive test.
D)functional test.

Question

Quizplus · Accepted Answer

Tracing transactions through the entire accounting system and examining evidence to determine whether control features are in operation is a test of controls. This test assesses the effectiveness of internal control procedures to prevent or detect errors or fraud. Sequence tests, substantive tests, and functional tests are different types of audit procedures that focus on different aspects of the financial statements.

The Auditor Selects Several Transactions in Each Functional Area and Traces