What is Test of Controls?

What is Test of Controls?

 Auditors check Material Misstatements may prevent, reveal and correct from this internal control and its durability.  

As a Example, when we Check sales invoices in a company we check quantities, prices, authorized sign etc.

This is internal Auditing testing system. If we perform an External Audit, there are many testing Controls there.

There are two Main point of this test

·         Design

·         Operation

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Design – Internal Control design for Reveal, Correct, Prevent material Misstatements

Operation – this particular Internal control long lasting on this company.

This Test of Controls can evaluate the procedures of the company.

What is Substantive Procedure?

It’s an audit procedure to Reveal Material Misstatements on Financial Statements.

There are two ways of Substantive Procedures.

Transaction Testing and Comprehensive Testing

 Transaction Testing

Test on Material Transactions

Comprehensive Testing

There two ways of this 

·         Correct Ledger Posting of relevant period.

·         Accuracy of Ledger Posting

As a example If we look to purchase procedure, check Purchase Order, Supplier Invoice, Good Receive Note, Credit Invoice, Cash Invoice.