Final answer:
Tests of controls are performed to assess if controls are operating effectively within an organization to ensure reliability of financial reporting. They are part of an auditor's evaluation of internal controls relevant to an audit. The effective operation of controls impacts the risk of material misstatement in financial statements.
Step-by-step explanation:
Tests of controls are used to test whether controls are operating effectively. They assess whether the controls have been implemented and are functioning as intended to prevent or detect errors or fraud. Controls must not only be in place but also be operating as designed. The effectiveness of a control determines its impact on the risk of material misstatement in financial reporting.
Controlled experiments are relevant in this context as they relate to the establishment of a system where variables are managed to test their effect on outcomes—in this case, the operation of controls. A mathematical model serves as the foundation for performance and effectiveness of the controls in meeting the client's needs. Therefore, when assessing the operating effectiveness, the model itself must be properly constructed using the right science and mathematics.
Option A) Operating effectively is the accurate answer to the student's question about the purpose of tests of controls. Such tests are part of an auditor's assessment of an organization's internal control system pertinent to the audit.