Auditors often have to test the effectiveness of infrequently used operating controls, such as the monthly closing and reconciliation processes. Determining the appropriate extent of testing of such controls presents unique challenges. Visit the website for the CPA Journal (Links to an external site.)(www.cpajournal.com) and read the article “Auditing Internal Controls in Small Populations” by Julian Jacoby and Neal Hitzig in the Ashford University Library.
Discuss the nature of the controls and why it is important for the auditor to test them. Also discuss the factors the auditor should consider in determining the extent of the tests of controls. Explain the sampling approach that the auditors recommend.