Test of Control in Audit

Internal controls refer to the rules and procedures within a company to ensure the integrity of financial and accounting information. These controls are essential to running a company. Similarly, they help with business continuity and ensure the accuracy of the financial reporting process. Internal controls are also a vital part of the auditing process. Auditors examine these controls through a test of controls.

What is a Test of Control in Audit?

A test of controls involves an evaluation of a client’s existing controls performed by auditors. This test is relevant to both external and internal auditors. Usually, auditors use these controls to check the effectiveness of the existing internal controls. Furthermore, a test of controls can provide valuable insights into the strengths and weaknesses of those controls.

Test of controls for internal auditing purposes helps companies identify weaknesses within internal controls. One of the primary tasks of an internal audit is to assess those controls. Usually, internal controls exist to detect or prevent risks of material misstatements. Therefore, a test of controls helps internal auditors establish whether the internal controls are sufficient in meeting those needs.

What are the types of Tests of Controls in Audit?

Auditors can use various audit procedures during a test of control. These procedures are known as the types or classifications of tests of controls. Usually, auditors choose the best procedure for a given client based on the circumstances. The types of tests of controls include the following.

Examination or Inspection

An examination involves checking records or documents. For external audits, it may also include inspecting a tangible asset physically. This procedure allows auditors to determine whether the manual internal controls are operational. This process entails checking for authorization, signatures, stamps, etc. Usually, this type of test of controls involves reviewing written documents and records.


Inquiry is a procedure used within tests of controls that involves verbal examination. In this procedure, auditors ask the management and staff about the controls. However, an inquiry does not constitute high-quality audit evidence. Auditors use it along with the other types of tests of controls to gather sufficient appropriate audit evidence.


Observation involves activities where auditors look at a process or procedure during its performance. Usually, it serves as evidence that the internal controls are operational. However, it only proves the internal controls worked during the observation time. Like inspection, auditors must use observation with other procedures to obtain better results.


Re-performance is a type of test of controls where an auditor reperforms the internal controls. Usually, the auditor uses this procedure when the other classifications fail to produce sufficient evidence. Among the types of tests of controls, re-performance provides the highest assurance level. However, it may not apply to every internal control in place.

When is a Test of Controls required?

In external audits, auditors perform a test of controls after obtaining an understanding of internal controls. From the results obtained through this operation, external auditors conclude if they can rely on the client’s systems. Consequently, they design audit procedures to assess the risks involved in the audit. Ideally, external auditors perform this process at the audit planning stage.

While external auditors perform a test of controls as a one-off event, the same does not apply to internal audits. Internal auditors regularly execute various tests to assess the effectiveness of internal controls. On top of that, external auditors only utilize these tests to examine the impact on the financial statements. For internal auditors, the scope of tests of controls is broader.


A test of controls in audit refers to procedures used by auditors to assess a client’s internal controls. It applies to both internal and external auditors. Usually, external auditors perform it during the planning or execution stage for an audit. However, it is an ongoing process for internal audits. There are several types of tests of controls that auditors may use.

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