Syllabus C. Internal Control C2. The use and evaluation of internal control systems by audito

C2b. How Auditors Identify Deficiencies 2 / 3

Syllabus C2b)

Evaluate internal control components, including deficiencies and significant deficiencies in internal control.

The auditor needs to assess if the system is implemented correctly and is effective

So now the system is documented it is time to see if:

  • The controls are implemented?

  • The controls are effective?

To do this we use tests of controls

Tests of Controls will be performed to test the effectiveness

The tests concern

  • How controls were applied

  • The consistency of the application

  • Who applied them

Typical tests include:

  • Walkthrough tests (follow a transaction through the system)

  • Observation (Eg Observe the stock count)

  • Computer aided audit techniques