After obtaining an understanding of internal control in an audit engagement, the auditor should perform tests of controls on:
A) those control activities for which reportable conditions were identified.
B) a random sample of the control activities that were identified.
C) those control activities that have a material effect upon the financial report balances.
D) those control activities that the auditor identified to reduce the assessed level of control risk.

Question

Quizplus · Accepted Answer

The purpose of performing tests of controls is to obtain evidence about the operating effectiveness of specific controls in reducing the assessed level of control risk. Therefore, the auditor should test those control activities that they identified to reduce the assessed level of control risk in order to gain assurance about their operating effectiveness. Testing controls that have a material effect upon the financial report balances may be necessary, but it is not the primary focus of tests of controls.

After Obtaining an Understanding of Internal Control in an Audit