What are the four ways to test internal Controls?

Expert Solution

Solution: Four ways to test internal controls are:-

1. OBSERVATION - Here Manager observe and watching people when they are performing there duty. This Test Somehow give an idea that whether internal system going to perform effectively or not..

2. INQUIRY - Here Top management may ask employee many question and conduct inquiry so that to check the internal control system.

3.Re Performance - Re performance or say recalculation This was costly as well as time consuming .

4.INSPECTION - Here Top management or Auditor may inspect physical evidence like checking record books,checking voucher matching it with account book, Checking entry and exit register , stamps , matching various related document for finding whether there was any variances or not.

Thus above are the four ways to test internal control , in large case more than one test conducted to ensure effectiveness of test. It may perform by top manager or executive or by auditor as per requirement.

ekkarill92 answered 2 hours ago

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What are the four ways to test internal Controls?

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