Page 84 - CA Inter Audit PARAM

CA Ravi Taori

QNO Which control to test? Old Course - (M16M/N20R)
330.01 Bhaskar CNO SA330.040 New Course - (J25M)
The auditor shall design and perform tests of controls to obtain sufficient appropriate audit evidence as to
the operating effectiveness of relevant controls.
OR

SA 330 states that auditor shall design and perform tests of controls to obtain sufficient appropriate audit
evidence as to operating effectiveness of relevant controls. Briefly discuss when such tests are to be
designed and performed in accordance with SA 330?
Answer ➢ Tests of Controls:
➢ The auditor shall design and perform tests of controls to obtain sufficient appropriate audit evidence
as to the operating effectiveness of relevant controls when-
• The auditor’s assessment of risks of material misstatement at the assertion level includes
an expectation that the controls are operating effectively (i.e., the auditor intends to rely
on the operating effectiveness of controls in determining the nature, timing and extent of
substantive procedures); or
• Substantive procedures alone cannot provide sufficient appropriate audit evidence at the
assertion level. A higher level of assurance may be sought about the operating effectiveness
of controls when the approach adopted consists primarily of tests of controls, in particular
where it is not possible or practicable to obtain sufficient appropriate audit evidence only
from substantive procedures

QNO Determining the extent of tests of controls Old Course - (M17R/M21E/ N20R)
330.05 Bhaskar CNO SA330.040 New Course - (J25M)
Discuss the matters the auditor may consider in determining the extent of tests of controls.
OR
When more persuasive audit evidence is needed regarding the effectiveness of a control, it may be
appropriate to increase the extent of testing of the control as well as the degree of reliance on controls.
Discuss the matters the auditor may consider in determining the extent of test of controls.
OR
If an auditor intends to place greater reliance on effectiveness of a control, state its likely effect on audit
evidence to be obtained as a result of such tests of controls. Why a higher level of assurance may be sought
by an auditor about the operating effectiveness of controls?
Answer

➢ When more persuasive audit evidence is needed regarding the effectiveness of a control, it may be
appropriate to increase the extent of testing of the control as well as the degree of reliance on controls.
Matters the auditor may consider in determining the extent of tests of controls include the following:

FLERT
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