A test if controls is a response to the risk of material misstatements I.e (test of details, substantive analytical procedures and test if controls)

Many auditors assess control risk at high (after risk assessment is complete) and use a fully substantive approach

control risk assessments of less than high must be supported with a test of controls to prove effectiveness

Once risk assessment is complete, the decision regarding responses is largely based on efficiency

Approach to testing controls depends on risk identified during risk assessment

Additionally re-perform the receipt controls on a sample basis. But before doing so, determine the controls you are testing and the sample size

Two situations where you are required to test controls

- when there is a significant risk and you are placing reliance on controls related to that risk

- when substantive procedures don't properly address a risk of material misstatement