Question

What 3 factors are considered, in trying to determine whether there is a need for additional detailed test of controls?

Answer 1

Explanation:

Test of control is an audit procedure used by the auditor to check the effectiveness of internal controls implemented and executed by the organisation.

The three factors that helps to determine whether there is a need for additional test of controls for an auditor are :

1. Level of control risk : when the auditor initially conducts the test of control and identifies the level of control risk higher than expected due to lack of proper implementation of internal controls, then he may be required to further conduct test of controls on internal controls.

2. Desired level of assurance : The auditor may have to conduct additional test of control on the basis of level of assurance an auditor want to obtain, regarding the effectiveness of internal control and related audit risk.

3. Level of deviation : The rate of deviation in the expected results and actual results obtained from population taken, may also force an auditor to reconsider and conduct additional test of controls.