The objective of tests of details of transactions

  • DeVry University, Fremont
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The objective of tests of details of transactions performed as tests of controls is to:a. Evaluate whether internal controls operated effectively.b.Monitor the design and use of entity documents such as prenumbered shipping forms.c. Determine whether internal controls have been implemented.d.Detect material misstatements in the account balances of the financial statements.ExplanationChoice "a" is correct. The objective of tests of details used as tests of controls is to evaluatewhether an internal control operated effectively.Choice "b" is incorrect. Tests of details of transactions would not typically be used to monitor thedesign and use of entity documents.Choice "c" is incorrect. Tests of details of transactions would not typically be used to determinewhether internal controls have been implemented.
Choice "d" is incorrect. The objective of tests of details of transactions performed as substantivetests is to detect material misstatements in the financial statements.Which of the following audit techniques ordinarily would provide an auditor with theleastassurance about the operating effectiveness of an internal control activity?
Choices "a", "c", and "b" are incorrect. Inquiry, inspection, observation (and reperformance) areall tests that may be used to evaluate the operating effectiveness of a control.In an environment that is highly automated, an auditor determines that it is not possible to reducedetection risk solely by substantive tests of transactions. Under these circumstances, the auditormost likely would:

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Term
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