If the auditor plans to rely on controls, their operating effectiveness is tested through tests of controls. If controls are not tested, control risk is assessed at maximum and more extensive substantive procedures are performed.
Source: BDS 200
Related terms
Tests of controlsProcedures performed to evaluate whether an entity's internal controls operate effectively in preventing, or detecting and correcting, material misstatements.Internal controlProcesses and controls designed by management to provide reasonable assurance regarding the effectiveness of operations, the reliability of financial reporting and compliance with laws and regulations.Risk of material misstatementThe risk that the financial statements are materially misstated, due to error or fraud, before the audit; it consists of inherent risk and control risk.Adverse opinionThe opinion in which the auditor states that the financial statements are not presented fairly, where misstatements are both material and pervasive.Agreed-upon proceduresAn engagement in which the practitioner performs procedures agreed with the entity and, where relevant, a third party, and reports only the findings without providing assurance.Analytical proceduresThe evaluation of financial information through analysis of plausible relationships among financial and non-financial data.
Last updated: October 31, 2026 · This definition is for general information only.