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Query about substantive and control testing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Query about substantive and control testing

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by Kim Smith.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 4, 2018 at 11:54 am #466086
    iqrashameem
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    I have a query relevant to control testing and substantive testing, I will be grateful to you if you will help me in this regard. Below I am stating my conception please correct me if I am wrong.
    As much I know the analytical procedure, inspection, observation, enquiry and recalculation is a source of evidence for substantive procedures and we will implement these on the basis of relevant assertions on a given question scenario.
    On the other hand the enquiry, observation, inspection and recalculation is a source of evidence for control testing we will implement them on the basis of control activities (comparison,authorisation,reconciliation,computer controls,arithematical controls,physical controls, segregation of duties) on a given scenario.
    And also the control systems (purchase,sales) comes under the control testing?

    Looking forward to your reply.
    Thanks.

    August 6, 2018 at 7:06 am #466356
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8312
    • ☆☆☆☆☆

    1. Yes the five procedures are as you list (see page 57 of the lecture notes).
    2. Observation, inspection and reperformance are used to test controls. Inquiry may be used in addition to these but is NOT sufficient on its own.
    3. I do not know what you are asking. Tests of controls will be applied to transaction cycles ONLY IF the auditor seeks to place reliance on the effective operation of controls – if controls are not expected to be effective a substantive approach will be adopted (see the overview page 41).

    August 6, 2018 at 5:29 pm #466449
    iqrashameem
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Thanks for your guidance.
    3.
    Means first we will (inspect,observe,recalculate) the internal controls in place by management if result is they are effective than the test of controls applies by auditor on transaction cycles if satisfied than restricted audit procedures will perform.

    August 7, 2018 at 7:08 am #466535
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8312
    • ☆☆☆☆☆

    I do not understand what you are writing – inspect/observe/reperform are the tests of controls.

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