Part (b) for five marks required candidates to describe a test of control to assess whether five controls identified in the scenario were operating effectively. Candidates performed well on this question.

Weaker candidates wasted time by writing out the five controls from the scenario; there were no marks available for this. In addition a significant minority of candidates gave substantive procedures rather than tests of control.

This was particularly the case when testing the control of internal audit undertaking physical verification of assets. Many candidates suggested “the external auditor should undertake a physical verification,” this is a substantive procedure.

Candidates are again reminded that a test of control should focus on allowing the auditor to verify if the client’s control is operating as stated.

In this instance the auditor should be focused on gathering evidence to demonstrate that internal audit has actually undertaken the physical verifications.

Furthermore some of the tests provided were vague or incomplete. For example “agreeing the serial numbers on the assets” but failing to agree these numbers to the non-current assets register.

Also “observation” while a valid audit procedure, is not always the most appropriate or effective method of testing controls.