Question

1. How does an auditor decide on the timing of control tests?

Answer 1

The timeliness of evidential matter is about when the evidence was obtained and the portion of the audit period to which it may be applied. If the auditor tests controls at a particular time, the auditor only obtains audit evidence that the controls operated effectively at that time. However, if the auditor tests controls throughout a period, he obtains audit evidence of the effectiveness of the operation of the controls during the period. Another important timing matter is how much to rely on tests of prior periods as evidence that controls are effectively designed and continues to operate effectively during the current audit period.

When considering timing in the current period we know that some tests of controls, such as observation, pertain only to the point in time at which the auditing procedure was applied, for example, when testing controls over the entity’s physical inventory counting at the period end. If, on the other hand, the auditor requires audit evidence of the effectiveness of a control over a period, audit evidence pertaining only to a point in time may be insufficient. Therefore, the auditor performs other tests that are capable of providing audit evidence that the control operated effectively at relevant times during the audit period, such as tests of general controls pertaining to the modification and use of a computer program during the audit period.