Tests Of Controls Practice Test

You are the auditor of a nonissuer in a financial statement audit and plan to rely on controls over the revenue process to reduce substantive testing. The entity uses pre-numbered shipping documents, and a supervisor is expected to review a daily sales register and match it to shipping documents before invoices are posted. Under these circumstances, which test would best determine the effectiveness of controls over the occurrence of recorded sales?

During a financial statement audit of a nonissuer, you identify that the same individual can set up new vendors in the master file and also process vendor payments, and management asserts that a monthly review of the vendor change report by the controller mitigates the risk. Under these circumstances, what is the auditor’s best approach to evaluate whether the mitigating control is operating effectively?