Question

As part of her controls testing, Tenisha has scheduled a meeting with the insurance company's financial operations director to determine the standards put in place to ensure that bank reconciliations are prepared accurately and efficiently. What type of controls testing is Tenisha practicing?

1) Reperformance
2) Inspection of physical evidence
3) Observation
4) Inquiry

Answer 1

Tenisha is practicing the Inquiry method of control testing by scheduling a meeting with the financial operations director to understand the standards for preparing accurate and efficient bank reconciliations.

Step-by-step explanation:

As part of her controls testing, Tenisha is employing the practice of Inquiry. This method involves gathering verbal or written information from relevant personnel to evaluate the design of internal controls and whether they have been implemented effectively. By meeting with the financial operations director, Tenisha aims to understand the standards in place for preparing bank reconciliations with accuracy and efficiency. The method she is using does not directly observe the control process in action; rather, it relies on discussions with employees who are responsible for the controls. Other control testing techniques include performance, Inspection of physical evidence, and Observation, which involve more direct assessment of the controls in practice.