Hey Guys, can you help me out with this Ninja MCQ
When the operating effectiveness of a control is not evidenced by written documentation, an auditor should obtain evidence about the control's effectiveness by:
A. Mailing confirmations.
B. Inquiry and other procedures such as observation.
C. Analytical procedures.
D. Recalculating the balance in related accounts.
The Correct Answer Choice is “B” which is fair enough. But the explanation is :
When the operating effectiveness of a control is not evidenced by written documentation, the auditor should perform the following risk assessment procedures to obtain an understanding of the entity and its environment, including its internal control:
Inquiries of management and others within the entity
Analytical procedures
Observation and inspection
Mailing confirmations, analytical procedures, and recalculating the balance in related accounts are examples of substantive procedures, which are tests of transaction details and account balances performed to detect material misstatements in the account balances, transaction class, and disclosure components of the financial statements. These tests are used to test financial statement assertions, not the operating effectiveness of a control
My concern is with the inclusion of Analytical Procedures in the options as well as in the explanation for understanding of entity and internal control.
REG 78
BEC 75
AUD 84
FAR 82
.