Which audit type is used to test and confirm the operating effectiveness of internal controls?

Which audit type is used to test and confirm the operating effectiveness of internal controls?

• A. Internal auditing
• B. Compliance testing
• C. System-based audits
• D. Quality audits

Answer: (B)

Testing whether internal controls operate effectively in practice is about compliance testing. This approach checks that control activities are performed in accordance with policies and procedures across the relevant transactions. By sampling transactions and reviewing evidence—such as proper approvals, timely reconciliations, and adherence to procedures—you confirm that the control not only exists but functions as intended over time. This is what distinguishes operating effectiveness from merely assessing whether a control is designed correctly or from other types of audits that focus on systems or quality processes.

Testing whether internal controls operate effectively in practice is about compliance testing. This approach checks that control activities are performed in accordance with policies and procedures across the relevant transactions. By sampling transactions and reviewing evidence—such as proper approvals, timely reconciliations, and adherence to procedures—you confirm that the control not only exists but functions as intended over time. This is what distinguishes operating effectiveness from merely assessing whether a control is designed correctly or from other types of audits that focus on systems or quality processes.