Fieldwork Opening Meeting

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Operating Effectiveness Testing  -  Determine whether the identified controls operated effectively over the period in scope. Once controls were identified, test plans were developed for each control, including:

• Nature and description of tests

• Sampling strategy

• Sample selection process (depending on total population and control frequency)

• extent of testing

• Period covered by tests

• Key administrative items (who, when, where and using what documentation)

• Resulting supporting documentation required to evidence tests

When testing the operating effectiveness of internal controls, each specified control is tested based on the frequency at which it is performed. For example, controls executed on a daily basis are tested to a higher frequency than controls executed on a quarterly basis. If testing indicates that a control does not operate as expected or designed, that control is noted as an exception. When one exception is observed and a reasonable explanation can be provided, sampling can be extended. Then, assuming that no further exceptions are noted in the additional sample items, the control is deemed effective. On the other hand, if an exception is observed and a reasonable explanation cannot be provided, or additional exceptions are noted in the larger sample, the control is deemed to be ineffective.

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Testing Operating Effectiveness
The auditor should test the operating effectiveness of a control by determining whether the control is operating as designed and whether the person performing the control possesses the necessary authority and competence to perform the control effectively.
Procedures the auditor performs to test operating effectiveness include a mix of inquiry of appropriate personnel, observation of the company's operations, inspection of relevant documentation, and re-performance of the control

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Ongoing discussions regarding Audit issues, exceptions, root causes and corrective action plan

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End of on-site fieldwork

Pre-closing meeting with business

Agreement on Issues and Corrective Action Plans

 - Agree on factual accuracy of exceptions timely

 - Perform on-poing review/approval of work papers

 - Identify root causes for issues

 - Discuss and agree with the Business on all issues and plans for corrective action on-site

 - Review / approve all work papers before Closing Meeting and Draft Report is given to Business

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End of Fieldwork Closing Meeting

 - Draft Audit Report given to the Business

 - All work papers must be reviewed and approved before Draft Report - Closing Meeting