The independent auditor selects several transactions in each functional area and traces them through the entire system, paying special attention to evidence about whether or not the control activities are in operation. This is an example of a(n):
A)Analytical procedure.
B)Test of controls.
C)Substantive procedure.
D)Functional test.

Question

Quizplus · Accepted Answer

This is an example of a test of controls, as the auditor is testing whether the control activities are in operation. The auditor is selecting transactions and tracing them through the system to test the effectiveness of internal controls.

The Independent Auditor Selects Several Transactions in Each Functional Area