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Audit and Assurance · Systems of internal control

Documenting and Testing Systems and Tests of Control for ACCA Audit

Updated 11 October 2026 · Fact-checked

Auditors record a client's system using narrative notes, flowcharts and questionnaires (ICQ and ICEQ). A walkthrough test confirms the system works as recorded. Tests of control then check that key controls operated effectively, using inspection, observation, enquiry and re-performance. Good answers link each test to a named control.

Understand Documenting and Testing Systems; Tests of Control

Before you can test a control, you must understand it. The auditor records how the client's system works. This gives a clear picture of where controls exist and where errors could arise.

There are three common ways to record a system.

  • Narrative notes: a written description of the system. They are flexible and suit simple systems. They become long and hard to follow in complex ones.
  • Flowcharts: a diagram showing the flow of documents and activities. They show segregation of duties and gaps at a glance. They take time to draw and update.
  • Questionnaires: a list of questions. An internal control questionnaire (ICQ) uses closed yes/no questions about whether controls exist, and a "no" answer signals a weakness. An internal control evaluation questionnaire (ICEQ) is open. It asks what controls exist to meet each objective, for example "what prevents goods being despatched but not invoiced?". Because it is open, it reveals which controls are missing. Questionnaires are quick but can be applied mechanically. They can also give a false sense of security if answers are not verified.

A walkthrough test follows one or a few transactions through the whole system, from start to finish. It confirms that your understanding is right and that the controls are in place as described. It is not enough on its own to prove controls operated all year.

Tests of control gather evidence that a control operated effectively throughout the period. You do them when you plan to rely on controls, or when substantive procedures alone cannot give enough evidence. Typical methods are inspection of documents for evidence of authorisation, observation of a control being done, enquiry of staff, re-performance of a control, and, for automated controls, testing with test data or inspecting system settings.

If the tests show the controls work, you can reduce substantive testing. If they fail, you must increase substantive work and report the weakness to management.

Key rules to remember

Test of control structure
Control objective → Control → Test → Evidence expected
Write each test so it checks a named control, not a general area.
Tests of control methods
Inspection, observation, enquiry, re-performance, test data
Enquiry alone is weak evidence. Pair it with inspection or re-performance.
Result of tests
Controls effective → rely and reduce substantive work; controls ineffective → more substantive work
Always state the effect on the audit approach.
Walkthrough vs test of control
Walkthrough = understanding confirmed; Test of control = operating effectiveness over the period
Do not treat a walkthrough as proof the control worked all year.

How to solve Documenting and Testing Systems; Tests of Control questions

Use this method for any question on recording systems or designing tests of control.

  1. 1Read the requirement. Decide whether it asks for recording methods, a walkthrough, or tests of control for a named cycle such as sales or purchases.
  2. 2Identify the control objective or the risk, such as goods received not recorded or an unauthorised order.
  3. 3List the controls in the scenario. Look for authorisation, segregation of duties, matching, sequence checks and approvals.
  4. 4For each control, write a specific test. State what you inspect, observe, re-perform or ask.
  5. 5Say what evidence you expect, for example a signature, a matched document or an exception report.
  6. 6Link results to the audit approach: reliance and less substantive work, or weakness and more substantive work.
  7. 7Keep each point short and separate so the marker can award one mark per point.

Quickest way: Control, test, evidence

When to use it: Use it for Section B questions that ask for tests of control in a named cycle, when time is short.

  1. Pick each control named in the scenario.
  2. Write "Inspect / Observe / Re-perform / Enquire" and the exact item.
  3. Add what you would expect to see, in a few words.
  4. Stop when you have one test per control or per mark available.

Common mistakes in Documenting and Testing Systems; Tests of Control

  • Writing substantive procedures, such as agreeing balances to confirmations, when asked for tests of control.

    Both are audit procedures and students mix them up.

    Fix: Ask: am I testing whether a control operated, or whether a balance is right? Only the first is a test of control.

  • Writing "check that controls are good" with no detail.

    Students describe the objective rather than the procedure.

    Fix: Name the document or action: inspect a sample of goods received notes for a matching signature and purchase order.

  • Treating a walkthrough as a test of operating effectiveness all year.

    Both involve following transactions.

    Fix: Say a walkthrough confirms understanding. Tests of control use a larger sample across the period.

  • Relying on enquiry alone.

    It is quick and easy to write.

    Fix: Enquiry is weak evidence. Add inspection, observation or re-performance.

  • Confusing ICQ and ICEQ.

    The names are similar.

    Fix: An ICQ uses closed yes/no questions, and a "no" signals a weakness. An ICEQ is an open question for each control objective ("what prevents...?"), so it reveals which controls are missing.

  • Forgetting the effect on the audit approach.

    Students stop once tests are listed.

    Fix: Finish by saying what you will do if the test passes or fails.

Worked examples

Example 1

Briefly describe two advantages and two disadvantages of flowcharts compared with narrative notes for recording a client's sales system. (4 marks)

Show the solution
  1. Advantage: a flowchart shows the flow of documents and the segregation of duties visually, so gaps are easier to spot than in a long narrative.
  2. Advantage: it is quicker to review and update for a complex system, and easier for a new team member to follow.
  3. Disadvantage: it takes more time and skill to draw, and is hard to change if the system alters often.
  4. Disadvantage: it may not capture detail, such as the reasons for a control, and can become cluttered in a large system.

Answer: Flowcharts show document flow and segregation of duties clearly and are easy to review. They are time-consuming to prepare, hard to amend and may omit detail that narrative notes can capture.

Example 2

A client orders goods using purchase requisitions approved by department heads. Orders are raised by the purchasing department. Goods are checked by stores staff who sign a goods received note (GRN). Invoices are matched to the order and GRN before the finance team authorises payment. Describe tests of control the auditor could carry out on this purchases system. (6 marks)

Show the solution
  1. Requisitions: inspect a sample for the department head's signature or approval.
  2. Orders: inspect a sample of purchase orders and agree each to an approved requisition.
  3. Goods received: observe stores staff checking deliveries, and inspect a sample of GRNs for a signature and a check against the order.
  4. Matching: re-perform the three-way match of invoice, order and GRN for a sample, and look for evidence of matching on the invoice.
  5. Payment: inspect a sample of payments for the authoriser's signature and confirm the invoice was matched before payment.
  6. Segregation: enquire of staff and observe who performs each task to confirm duties are separate.

Answer: Tests: inspect requisitions for approval; agree orders to requisitions; observe and inspect GRNs for stores checks; re-perform the invoice, order and GRN match; inspect payment authorisation; observe and enquire about segregation of duties. If these pass, the auditor can rely on controls and reduce substantive testing of purchases and payables.

Exam tips

  • Match each test to a control in the scenario. Generic tests earn few marks.
  • Use the verbs inspect, observe, re-perform and enquire. They show the nature of the test.
  • Do not give substantive tests when the requirement says tests of control.
  • State the effect of the result on the audit approach when marks allow.
  • In Section A objective test cases, know the ICQ versus ICEQ difference and the walkthrough purpose, as these are often asked directly.

Documenting and Testing Systems; Tests of Control: frequently asked questions

What is a walkthrough test in audit?

It follows a few transactions through the whole system, from start to finish. It confirms that your understanding of the system is correct and that the controls exist as described. It does not prove the controls operated all year.

What is the difference between an ICQ and an ICEQ?

An ICQ uses closed yes/no questions about whether controls exist, and a "no" answer signals a weakness. An ICEQ is an open question for each control objective, asking what controls are in place to achieve it. The ICEQ is better at revealing missing controls.

Are tests of control always required?

No. You do them when you plan to rely on controls, or when substantive procedures alone cannot give enough evidence. Otherwise you may use a wholly substantive approach.

Which test of control gives the strongest evidence?

It depends on the control. Inspection and re-performance generally give stronger evidence than observation or enquiry. Observation is limited to the moment observed, and enquiry alone is weakest. So combine methods rather than rely on one.