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Hi tutor,
May I please confirm my understanding and ask one question related to it please.
1. Where there is a low risk of MM (IR and CR is both low) auditor can perform ‘test of control’ as an audit procedure but where there risk of MM is high, auditor NEEDS to perform substantive testing and can also do test of controls if auditor wants more audit evidence or decides to rely on the test on controls?
2. Can test of control be done both at the financial statement level and assertion level? Or is it only done at the assertion level?
Thank you so much,
CJI applaud your enthusiasm in reading the ISAs, but I think it would also help to look at the notes too, to get more of an overview and put topics in context. For example, if you look at the “overview” on page 49 – the two approaches: “ToCs + substantive” or “only substantive” are outlined on page 50.
If you then look at the examples of control activities on page 71 – these are some of the things that would be tested by TOCs. Going back to FS level vs assertion level on 59, it should be clear that control activities relate to transactions and balances – i.e. assertion level.
I think you were coming to the correct conclusions yourself 🙂
Hi Kim,
Thank you for your reply. This may be a very dumb question… But where can I view the ‘notes’ that you are referring to?
Thank you so much
All our AA resources are accessible from this page https://opentuition.com/acca/aa
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