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•• Inspection: Documents supporting transactions and other events are inspected to gain assurance that internal controls have operated properly.
•• Inquiry: Inquiries about internal controls which have no audit trail need to be done e.g. inquiring whether appropriate security measures are undertaken during payment of wages.
•• Re-performance of internal controls. E.g. reconciliation of the bank accounts to ensure clients bank accounts to ensure clients bank reconciliation statements is accurately prepared.
•• Observation. This entails observing control procedures being performed e.g. physical counting of stock will enable the auditor confirm that the exercise is being conducted properly. Such observation will provide evidence that a control is operating effectively as designed. When obtaining audit evidence about the effectiveness of internal controls, the auditors considers how they were applied and the consistency with which they were applied. The concept of effective operational controls recognizes that some deviation from prescribed control may occur. This may be due to changes in key personnel,
human error and significant fluctuation in the volume of transactions.
Wilfykil answered the question on April 11, 2019 at 12:08
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