As part of a preliminary survey of the purchasing function, an internal auditor reads the department's policies and procedures manual and concludes that the manual describes the processing steps clearly and contains an appropriate internal control design. The next engagement objective is to evaluate the operating effectiveness of internal controls. Which procedure would fulfill this objective most effectively?
To evaluate the operating effectiveness of internal controls, the most effective procedure is to perform a compliance test. A compliance test determines whether the established procedures and controls are being followed in practice, ensuring that the internal controls are not only well-designed but also properly implemented and functioning as intended. This is essential to confirm the actual effectiveness of these controls in daily operations.
Compliance test terminology equal to test of control operating effectiveness, because control design have to be adhered to in order for control to be effective.
Please explain why a compliance test is the correct choice
Because adequate policies and procedures are worthless if the deparment is not complying. That's why a compliance test should be the next step.