Week 3 - DQ 1

What are the two types of audit tests? What are some examples of each of these two types of tests? How will the auditor use the data gathered from these tests?

Response #1

The two types of audit tests are tests of control and substantive tests. According to Boynton and Johnson (2006), a test of controls is employed "to determine effectiveness of design and operation of internal controls", whereas a substantive test is employed "to determine fairness of significant financial statement assertions". An example of tests of control would be inspecting original records such as checks, journal entries, invoices, memos, receipts, and vouchers that support and/or serve as proof of a business transaction. Another example, would be inquiring of client personnel, and observing client...