Dual purpose tests allow the auditor to
A)select one sample of balances and perform internal control and substantive tests of transactions on the sample
B)select one sample of transactions and perform internal control and substantive tests of transactions on the sample
C)select one sample of controls and perform internal control and substantive tests of transactions on the sample
D)select one sample of controls and perform internal control and substantive tests of transactions on the controls

Question

Quizplus · Accepted Answer

Dual purpose tests are performed to achieve two objectives simultaneously, i.e., to test the operating effectiveness of internal control and to gather substantive evidence. The auditor selects a sample of transactions and performs internal control tests on them to assess the effectiveness of the control system. Afterward, the auditor also carries out substantive testing on the same sample to obtain audit evidence about the accuracy and completeness of the transactions. Therefore, Choice B is the best answer. Choice A is incorrect because the auditor is selecting balances instead of transactions. Choice C is incorrect because controls are tested for the operating effectiveness only, they do not provide substantive audit evidence. Choice D is incorrect because controls cannot provide substantive audit evidence.

Dual Purpose Tests Allow the Auditor to