Page 186 - Auditing Standards

As of December 15, 2017
.23 The evidence provided by the auditor's tests of the effectiveness of controls depends upon the mix of

the nature, timing, and extent of the auditor's procedures. Further, for an individual control, different
combinations of the nature, timing, and extent of testing might provide sufficient evidence in relation to the
degree of reliance in an audit of financial statements.

Note: To obtain evidence about whether a control is effective, the control must be tested directly; the
effectiveness of a control cannot be inferred from the absence of misstatements detected by substantive

procedures.

Nature of Tests of Controls

.24 Some types of tests, by their nature, produce greater evidence of the effectiveness of controls than
other tests. The following tests that the auditor might perform are presented in the order of the evidence that

they ordinarily would produce, from least to most: inquiry, observation, inspection of relevant documentation,
and re-performance of a control.

Note: Inquiry alone does not provide sufficient evidence to support a conclusion about the effectiveness of
a control.

.25 The nature of the tests of controls that will provide appropriate evidence depends, to a large degree,
on the nature of the control to be tested, including whether the operation of the control results in documentary
evidence of its operation. Documentary evidence of the operation of some controls, such as management's
philosophy and operating style, might not exist.

Note: A smaller, less complex company or unit might have less formal documentation regarding the

operation of its controls. In those situations, testing controls through inquiry combined with other
procedures, such as observation of activities, inspection of less formal documentation, or re-performance
of certain controls, might provide sufficient evidence about whether the control is effective.

Extent of Tests of Controls

.26 The more extensively a control is tested, the greater the evidence obtained from that test.

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