What is one goal of tests of controls?

One goal of tests of controls is to gather sufficient evidence of the operating effectiveness of a company's internal controls. This is crucial for auditors because it helps them determine whether the controls are functioning as intended and therefore can be relied upon when conducting the audit. Effective internal controls play a vital role in ensuring accurate financial reporting and compliance with applicable laws and regulations. By assessing the design and operational effectiveness of these controls, auditors can identify any weaknesses that may increase the risk of material misstatement in the financial statements.

This understanding allows auditors to make informed decisions about the nature, timing, and extent of further audit procedures, particularly substantive tests. The focus on operational effectiveness directly influences how auditors approach the overall audit strategy and can lead to a more efficient audit process.