CA Inter P5 · Chapter 3 · Question 8 of 13
The auditor of Harshil Steel Ltd. tested a control over credit approvals last year and found it effective. The control mitigates a significant risk. There is no change in the control this year. Under SA 330, the auditor intending to rely on it:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Must test the operating effectiveness of the control in the current period
Explanation
SA 330 allows the auditor to use evidence from previous audits about unchanged controls, testing them at least once in every third audit. However, where the auditor plans to rely on controls over a risk that has been determined to be significant, the controls shall be tested in the current period. Inquiry alone is insufficient to test operating effectiveness.
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