When an auditor performs a test of controls, the auditor is mainly assessing whether the controls:
Correct answer: B. Operate effectively during the period
- A. Prevent every possible fraud
- B. Operate effectively during the period
- C. Guarantee profitable operations
- D. Replace substantive audit procedures
Explanation
A test of controls evaluates whether a control operated effectively during the relevant period. Effective controls reduce risk but cannot prevent every fraud or eliminate the need for appropriate substantive work.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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