Page 97 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
How?
Inquiry in combination of other audit procedures
• Inquiry + Inspection/ Re-performance = More effective
• Inquiry + Observation= Less effective
What?
Perform other audit procedures, to obtain audit evidence about the operating effectiveness of the controls,
including:
• By whom or by what means they were applied.
• The consistency with which they were applied.
• How the controls were applied at relevant times during the period under audit.
• Effectiveness of indirect controls.
Timings of TOC:
2 ways of testing can be done:
• For particular Time
• Throughout the period
Example:
• If stock count is performed once at year end, then TOC for count should be done for year end
• Sales occurs on daily basis, so TOC for sales will be performed for the whole year.
Extent of Controls:
Strategy
Higher Degree of reliance on controls, Increase extent of TOC.
Obtain more persuasive evidence for effectiveness of controls.
Extent of TOC depends on following factors: (Shortcut “Right- LEFT”)
• R - Relevance & Reliability of Audit Evidence to be obtained
• L - Length of time during audit period
• E - Expected Rate of Deviation
• F - Frequency of performance of the control
• T - Audit evidence from Test of other controls

(CNO-SA330.060) Using Audit Evidence Obtained in Previous Audits
Auditor has to determine whether it is appropriate:
• To use audit evidence about effectiveness of controls from PY.
• Also after how much time retest of controls should be done.
Following factors should be considered:
(Shortcuts “P2M & CM are Chief Guest” ask them
• P- Personnel Change Having Significant effect.
• P- Previous year effectiveness of Controls & Extent of Deviation.
• M- Manual or Automated Controls
• C- Other Components E.g. Control Environment
• M- Risk of Material Misstatement & Extent of reliance on Controls.
• C- Change in Circumstance but lack of change in Control.
• G- General IT Controls Effectiveness.
If after considering above factors auditor decides to use PY audit evidence for TOC, Auditor will have to
determine whether PY audit evidence is relevant.
For this he will have to check whether significant changes have taken place in controls.
Use inquiry combined with Observation or inspection.

Whether there is change in Control?

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