Test of controls.

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Test of controls.

Postby maine » Tue Sep 29, 2009 3:09 pm


Can you please help me with test of controls , I am not understanding the concept especially with a sales system and a purchase system.
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Re: Test of controls.

Postby andrewr » Tue Sep 29, 2009 5:07 pm

Is there anything specific you want to know?

When you test a control you're testing first of all to see if controls are in place and then to see if they work and how well. You then decide how much you can rely on the controls that are in place.

So for a sales system, you could do a walk through test from placing an order to when it goes out for delivery to see if everything is completed properly and authorised etc.. i.e. to see if the controls are doing their job in preventing something happening that shouldn't.

That's a basic explanation anyway.
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Re: Test of controls.

Postby Asif Mahmud Sabir » Tue Sep 29, 2009 5:13 pm

Test of Control are tests to check whether Internal Ctrl are working or not. For example in a sales system, salesman responsibility is to sign the invoice and keep a copy of the invoice. Over here keeping a copy invoice and signing it is the internal ctrl. Test of Ctrl would be physically verifying whether copies are kept and checking appropiate signature, both on sample basis.

Note that the auditor is 'not' checking whether the sales amount is accurate or not.

IF they find that ctrls are working fine then other expensive/cumbersome procedure such as vouching invoice from and to ledgers can be avoided to an extent because these ctrl are implemented to ensure sales system are working properly. The mix of test of ctrl and substantive procedure is actually a judgement. However no matter how good the internal ctrl is, atleast some sort of substantive procedure should be applied (even recommended by ISAs)
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