Audit TEST of CONTROL Working-Paper Example

Audit Test-of-Control Working Paper Example

A Test of Control (ToC) evaluates whether a control operated effectively throughout the audit period. Unlike a walkthrough, which focuses on design and implementation, a Test of Control focuses on operating effectiveness.

GENERAL INFORMATION
Working Paper Reference	IC-TOC-001
Audit Area	Procurement and Accounts Payable Process
Control Objective	To ensure that purchases above authorized thresholds receive appropriate approval before orders are placed.
Key Risk	Unauthorized purchases may occur, resulting in financial loss, fraud, or policy violations.
Control Under Test	Purchase Orders exceeding USD 10,000 require approval from both the Procurement Manager and Finance Manager before issuance.
Control Owner	Procurement Manager
Control Frequency	Per Transaction
Audit Period	1 January 2026 – 31 December 2026
Auditor	Internal Audit Department

1. Test Objective

To determine whether all Purchase Orders exceeding USD 10,000 were approved by the required approvers during the audit period.

2. Test Procedure

1. Obtain population of all Purchase Orders exceeding USD 10,000 during the audit period.
2. Select a sample of transactions.
3. Inspect approval records within the ERP system.
4. Verify presence of both Procurement Manager and Finance Manager approvals.
5. Determine whether approval occurred before PO issuance.
6. Record exceptions identified.

3. Population Information

Population Description	Purchase Orders exceeding USD 10,000
Population Size	245 transactions
Audit Period	1 January 2026 – 31 December 2026
Sampling Method	Random Sampling
Sample Size	25 transactions

4. Test Results

Sample Item	PO Number	Required Approval	Result	Status
1	PO-2026-00015	Procurement Manager & Finance Manager	Both approvals present before PO issuance.	PASS
2	PO-2026-00031	Procurement Manager & Finance Manager	Both approvals present before PO issuance.	PASS
3	PO-2026-00044	Procurement Manager & Finance Manager	Finance Manager approval missing.	EXCEPTION
4	PO-2026-00067	Procurement Manager & Finance Manager	Both approvals present before PO issuance.	PASS
Continue for remaining sample items...

5. Exception Summary

Number of Samples Tested	25
Number of Exceptions	1
Exception Rate	4%
Exception Description	One Purchase Order was issued without evidence of Finance Manager approval.
Potential Impact	Unauthorized procurement commitment and violation of approval policy.
Management Explanation	System workflow was temporarily bypassed during ERP maintenance.

6. Auditor Evaluation

Control Deviations: 1

Deviation Rate: 4%

Assessment: Control generally operated effectively; however, one exception indicates non-compliance with approval requirements.

7. Conclusion

Based on testing of 25 sampled Purchase Orders, the control operated effectively during the audit period, except for one isolated deviation.

Overall Control Effectiveness Rating:
Effective with Minor Exception

Recommended Action:
Management should strengthen monitoring to prevent workflow bypasses during system maintenance periods.

8. Auditor Sign-Off

Prepared By _____________________	Date _____________________
Reviewed By _____________________	Date _____________________