Auditing - What are Tests of Controls

The video tutorial discusses the role of tests of controls in auditing, particularly for publicly traded companies where it is mandatory. It explains that auditors may use sampling techniques and will proceed with testing controls if initial risk assessments indicate effective internal controls. For non-public companies, testing is optional but can reduce substantive testing. However, if it incurs significant time or costs, auditors may skip it. The video also outlines various testing methods, including inquiry, observation, document examination, and re-performance, which provides the strongest evidence.

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