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Dear tutor,
I’m quite confused about forming the answer for audit responses. When to write substantive testing or test of controls or both
So I wonder if I can think of the answer in this way:
For inherent risk I will think of substantive testing
For control risk I will think of test of controls, to see how controls failThanks in advance 😀
Broadly, you are right.
You can only deal with control weaknesses if the question has described them. However, if a control is missing (eg purchase incoices not matched to orders) you cannot test that control: it simply isn’t there. If a control is missing you have to perform more substantive tests, which will usually relate to inherent risks ie invoices are paid for goods that haven’t been ordered.
If a control is supposed to be present then you must test that to ensure it is operating.
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