Tests of Control

Test of controls is the type of audit procedure that we perform in order to evaluate whether the client’s Internal Control works effectively in preventing or detecting risks of material misstatements at the assertion level.

While obtaining an understanding of the client’s internal control as auditors we usually try to identify the internal controls that can reduce the risks of material misstatement. Then we perform the test of controls to obtain evidence of how effectively the controls operate in practice before we can rely on them.

As a result we can choose to rely on the controls and reduce some of our substantive works if the client’s controls work as intended after obtaining the result of the test of controls.

On the other hand if the controls are weak and not effective in preventing or detecting risks of material misstatements the control risk will be high. In this case we will need to increase our substantive tests in order to reduce the audit risk to an acceptable level.