TESTING METHODS

TESTING METHODS

• Having learnt about the various IT risks and controls, let us understand the different ways testing is performed in an automated environment. There are basically four types of audit tests that should be used. 
• They are inquiry, observation, inspection and reperformance. As shown in the illustration below, inquiry is the most efficient audit test but it is also gives the least audit evidence. Hence, inquiry should always be used in combination with any one of the other audit testing methods. Inquiry alone is not sufficient. 
• Reperformance is most effective as an audit test and gives the best audit evidence. However, testing by reperformance could be very time consuming and least efficient most of the time. 
• Generally, applying inquiry in combination with inspection gives the most effective and efficient audit evidence. 
• However, which audit test to use, when and in what combination is a matter of professional judgement and will vary depending on several factors including risk assessment, control environment, desired level of evidence required, history of errors/ misstatements, complexity of business, assertions being addressed, etc. The auditor should document the nature of test (or combination of tests) applied along with the judgements in the audit file as required by SA 230. 

When testing in an automated environment, some of the more common methods are as follows:

•  Obtain an understanding of how an automated transaction is processed by doing a walk through of one end-to-end transaction using a combination of inquiry, observation and inspection. 
•  Observe how a user processes transactions under different scenarios. 
•  Inspect the configuration defined in an application.