An auditor wishes to perform tests of controls on an entity's cash disbursements procedures. If the control activities leave no audit trail of documentary evidence, the auditor most likely will test the procedures by:
A)inquiry and analytical procedures.
B)confirmation and observation.
C)observation and inquiry.
D)analytical procedures and confirmation.

Question

Quizplus · Accepted Answer

Observation and inquiry are the most suitable methods for testing controls when there is no audit trail of documentary evidence. Observation allows the auditor to see the control activity being performed in real-time, while inquiry involves asking knowledgeable persons within the entity about the control activities. These methods can provide evidence of the operational effectiveness of the entity's controls over cash disbursements when documentary evidence is not available.

An Auditor Wishes to Perform Tests of Controls on an Entity's