Application of test of controls in ifrs reporting audit

Karpachova Olga
PhD student, Banking University, Kiev, E-mail:olga.owlblack@gmail.com, ORCID ID: https://orcid.org/0000-0001-7163-2177

Cite this article:

Karpachova O. (2022) Application of test of controls in ifrs reporting audit. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Zastosuvannya testiv kontrolyu pri auditi finansovoyi zvitnosti za MSFZ; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 1-2 (290-291), pp. 54-59.

Abstract

The purpose of the article is to study the use test of controls in the audit of IFRS reporting. The main research methods were general scientific approaches to determining the essence, methods of deduction and induction, comparison, generalization. The article provides definitions of control and internal test of controls. During the study, the purpose of the test of controls was formed. Internal control types are determined and methods of test of controls are considered. The stages of test of controls have been formed. The requirements for the preparation of working documentation based on the results of test of controls are determined. The practical significance of the study of the application of test of controls during the audit of IFRS reporting is to determine the nature and relevance of such audit procedures, as well as to identify clear stages test of controls. Given that the reporting prepared in accordance with international standards has more demanding requirements, the auditor's requirements for the quality of the audit are increased, including the availability of evidence as a basis for providing audit opinions. Also, the presence of the company's internal control system may be required in addition to owners, investors, banks, regulators. Test of controls help the auditor identify risks at the financial reporting level, reduce the audit process, and obtain additional audit evidence. Financial reporting risk is an event that may result in a material misstatement of financial statements and / or non-compliance with IFRS. Although test of controls may not fully detect all risks of fraud, auditors may use test of controls to check operational control for gaps, which can significantly reduce the risk. Test of controls can show the real state of the enterprise: if control is effective, the risk of control is low. If controls are identified as vulnerable or ineffective, the risk of control is high. If auditors encounter an error during the audit, they will expand the sample and use further testing. If additional errors are identified, they will consider whether there is a problem of systematic control that makes the means of control ineffective, or whether the errors appear to be isolated cases that do not reflect the overall effectiveness of the control.

Keywords

audit, test of internal controls, internal control, ISA, IFRS, audit procedures, IFRS reporting audit.

JEL classification: M410; DOI: 10.32680/2409-9260-2022-1-2-290-291-54-59

UD classification: 657.6

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