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Audit Ii

The document contains the responses from a student named Victor Boateng to two questions about auditing tests of control. For question one, Victor distinguishes between compliance testing, which confirms a firm is following internal rules and regulations, and substantive testing, which involves detailed testing of transactions and balances by tracing items through an organization's systems. For question two, Victor explains that the purpose of tests of control is to gather evidence to test an organization's compliance with control procedures, such as preventing theft, understanding business performance, minimizing risks, and protecting assets.

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Victor Boateng
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66 views2 pages

Audit Ii

The document contains the responses from a student named Victor Boateng to two questions about auditing tests of control. For question one, Victor distinguishes between compliance testing, which confirms a firm is following internal rules and regulations, and substantive testing, which involves detailed testing of transactions and balances by tracing items through an organization's systems. For question two, Victor explains that the purpose of tests of control is to gather evidence to test an organization's compliance with control procedures, such as preventing theft, understanding business performance, minimizing risks, and protecting assets.

Uploaded by

Victor Boateng
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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CHRISTAIN SERVICE UNIVERSITY COLLEGE NAME: VICTOR BOATENG INDEX NO.

: 10258898 COURSE: BBA (ACCOUNTING)

QUESTION 1: Explain the distinction between test of control (Compliance Test and Substantive Test) In compliance testing : audit undertaken to confirm whether a firm is following the rules and regulations (prescribed by its internal authority or control system) applicable to an activity or practice whist Substantive testing is the detailed testing the auditor will undertake on transactions and balances. For example, in a sales audit, the auditor will start from the initial customer order, trace the order to the sales invoice, trace the sales invoice to the customer s ledger account, to the debtors control account, to the VAT account (where appropriate), to the sales within the financial statements and to eventual payment (where appropriate). QUESTION 2: Explain /describe the purpose of Test of Control. In test of Control, you gather evidence with the purpose of testing an organization's compliance with control procedures. For example, stop things such as assets, documents and records going missing but benefiting individuals either within or outside an organization, make sense of how the business is doing, prevent or at least minimize business risks, ensure entity assets are protected and safeguarded.

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