Test of internal control

Auditors can employ audit sampling procedures in a variety of ways. Sampling is the use of an audit procedure on some specific audit items within an account balance or class of transactions.

The sampling method used should produce an equal probability that each unit in the sample could be selected. This procedure provides good basis for inferences.

Case of Astra Limited

Before performing sampling procedures during an audit of Astras internal controls, the auditor has set the tolerable deviation rate at 5.0% for five particular internal control procedures. After the procedures, the external auditor computes a computed upper deviation rate of 4.0%.

Required:

a) Discuss the effectiveness of the internal control at Astra Limited

b) Compare and contrast between test of control and substantive test