When assessing control risk, which of the following is a common procedure for auditors?

When assessing control risk, auditors must gather evidence to understand how well internal controls are functioning. Performing analytical procedures, observing physical inventory counts, and conducting tests of details of transactions are all integral methods used to evaluate the effectiveness of a company’s internal controls.

Performing analytical procedures involves examining financial relationships and trends to identify any unusual fluctuations or variations. This helps auditors assess areas where controls might be weak, potentially indicating higher control risk.

Observing physical inventory counts is a direct way to confirm the accuracy of inventory records and ensure that the counting procedures are being performed properly. This observation helps auditors gain confidence in the control over inventory, which is a critical area in many organizations.

Conducting tests of details of transactions includes examining individual transactions to ensure they are recorded accurately and comply with the company’s policies and procedures. This method assesses the effectiveness of controls over specific transactions and provides tangible evidence related to the control environment.

Since all of these procedures contribute to the overall evaluation of control risk, selecting all of the above as the answer accurately captures the comprehensive approach auditors take in assessing control risk within an organization.