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CMA Intermediate · Corporate Accounting and Auditing · Report on Internal Financial Control over Financial Reporting

In an audit of internal financial controls over financial reporting, which procedure is best described as 're-performance' of a control?

Re-performance is the auditor independently carrying out the control procedure, for example recomputing a bank reconciliation, and comparing the result with the entity's own. Inquiry, inspection of manuals and observation are different test types and do not involve the auditor repeating the control.

  1. AAsking the accounts manager whether bank reconciliations are prepared monthly
  2. BIndependently carrying out the control procedure, such as recomputing a reconciliation, and comparing it with the entity's resultCorrect
  3. CReading the internal audit manual of the company
  4. DWatching the cashier count petty cash on the day of the visit

Explanation

Re-performance means the auditor independently executes the control and compares the outcome with what the entity recorded. Inquiry only collects statements, document reading is inspection, and watching a count is observation. Only the second option describes re-performance.

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