CPA Exam — AUDPerforming Further Procedures and Obtaining EvidenceMedium
Which of the following would be considered a test of controls?
- AReperforming the reconciliation of bank statements.
- BConfirming accounts receivable with customers.
- CVouching expense entries to supporting invoices.
- DPerforming analytical procedures on revenue trends.
Show answer & explanationAnswer & explanation
Correct answer: A. Reperforming the reconciliation of bank statements.
Reperforming the reconciliation of bank statements is a test of controls because it involves the auditor independently executing a control activity (reconciliation) to assess its effectiveness. The other options are substantive procedures.
Why the other options are wrong
- B. Confirming accounts receivable is a substantive test of details for existence and valuation.
- C. Vouching expense entries is a substantive test of details for occurrence and accuracy.
- D. Analytical procedures are primarily substantive procedures, though they can provide some evidence about controls.
Tests of Controls
Audit procedures performed to evaluate the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the assertion level.
- Involve inquiry, observation, inspection of documents, and reperformance.
- Are performed when the auditor plans to rely on controls to reduce substantive testing.
- Focus on how controls were applied, consistency, and by whom.
Memory trick: Audit Procedures: Tests of Controls vs. Substantive Tests.