AUD MCQ help — Test of controls

  • Creator
    Topic
  • #850182
    slammajamuh
    Participant

    Which of the following procedures is considered a test of controls?

    a. An auditor reviews the entity’s check register for unrecorded liabilities.

    b. An auditor evaluates whether a general journal entry was recorded at the proper amount.

    c. An auditor interviews and observes appropriate personnel to determine segregation of duties.

    d. An auditor reviews the audit workpapers to ensure proper sign-off.

    Correct answer is B, but i was thinking it was C.
    It was my understanding that you test segregation of duties through test of controls: Reperformance, Inspection, Inquiry, Observation. That leads me to believe C is correct, but is it simply for the fact it uses the words “to determine” that it is implying obtaining an understanding of IC and not testing controls?

Viewing 3 replies - 1 through 3 (of 3 total)
  • Author
    Replies
  • #850213
    pharaoh
    Participant

    I have that question in Becker and the answer is C and evaluation of entries at proper amount is substantive testing

    AUD - 93
    BEC - 79
    FAR - 84
    REG - 83

    FAR 8/2016
    AUD 1/2017
    REG TBD
    BEC TBD

    #850254
    slammajamuh
    Participant

    @Pharaoh
    I use Roger and this is the explanation given:
    By evaluating whether a general journal entry was recorded at the proper amount, the auditor is testing controls over the recording of journal entries. Reviewing the check register for unrecorded liabilities is a substantive test of details. Interviewing and observing personnel to determine segregation of duties is part of obtaining an understanding of internal controls so it can be evaluated and the auditor can determine whether or not to perform tests of controls. Reviewing audit workpapers is part of the process of making certain that the audit has been completed in conformity with GAAS.

    What does Becker say?

    #850414
    pharaoh
    Participant

    d. An auditor interviews and observes appropriate personnel to
    determine segregation of duties.
    Explanation
    Choice “d” is correct. Interviewing and observing appropriate personnel
    to determine segregation of duties is a test of controls. Segregation of
    duties is a subcomponent of the control activities component of internal
    control.
    Choice “c” is incorrect. An auditor's evaluation as to whether a journal
    entry was recorded at the proper amount is a substantive test.

    I use Roger too but Becker is making more sense on this one

    AUD - 93
    BEC - 79
    FAR - 84
    REG - 83
    Roger & Ninja MCQ

    DONE

    FAR 8/2016
    AUD 1/2017
    REG TBD
    BEC TBD

Viewing 3 replies - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.