Which techniques can an auditor use in testing the effectiveness of controls?

Reperformance and observation are essential techniques for an auditor in testing the effectiveness of controls. Reperformance involves the auditor executing the same procedures that the client’s internal controls are supposed to carry out. This allows the auditor to verify that the controls are functioning as intended and can effectively prevent or detect errors and fraud. Observation, on the other hand, entails the auditor watching a process or procedure as it occurs, which can provide insights into whether staff are following established protocols and whether the controls are being applied correctly in real-time.

Using these techniques, auditors can directly assess the operation of controls in a practical setting, providing robust evidence of their effectiveness. This direct approach sets these methods apart, as they involve firsthand examination rather than reliance on documentation or statements, thus yielding a higher level of assurance regarding the control environment.