Question

With respect to timing, tests of controls _______.

A. are usually carried out after the firm's financial statement date
B. are usually carried at the firm's financial statement date
C. will usually be carried out at an interim date, often about three months prior to year-end
D. will usually be carried out at an interim date, often about six months prior to year-end

Answer 1

Tests of controls are usually performed around three months before the financial statement year-end to allow auditors to evaluate and address potential issues before the annual audit.

Step-by-step explanation:

With respect to timing, tests of controls are usually carried out at an interim date, often about three months prior to year-end. This approach allows auditors to assess the effectiveness of internal controls earlier in the audit process and identify any issues that need rectification before the end of the financial period. Conducting tests of controls before year-end provides sufficient time to perform substantive procedures during the year-end audit work.