Question

For a private company audit, tests of controls are normally performed only on those internal controls

the auditor believes have not been operating effectively during the period under audit.
A) True
B) False

Answer 1

Tests of controls are not only performed on internal controls the auditor believes have not been operating effectively.

Step-by-step explanation:

False. In a private company audit, tests of controls are not only performed on internal controls that the auditor believes have not been operating effectively during the period under audit. The purpose of tests of controls is to assess the effectiveness of internal controls in preventing or detecting material misstatements in the financial statements.

The auditor selects a sample of transactions or activities and evaluates whether the controls designed to prevent or detect misstatements in those transactions or activities are operating effectively. The auditor does not limit the testing to controls that are believed to be ineffective.