 In this presentation, we will discuss performing and documenting tests of controls starting off with the performing. First, a word from our sponsor. Well, actually these are just items that we picked from the YouTube shopping affiliate program, but that's actually good for you. Because these aren't things that we're just given to us from some large corporation which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased and used ourselves. Acer 27 inch monitor. I've been using an Acer monitor as my primary monitor for a few years now. This is the first Acer monitor that I have used after having used a series of different brands of monitors in the past. The Acer monitor has been performing well and I'm trusting the Acer brand more and more as I use the monitor. I have a 27 inch monitor which I think is ideal for what I do, which is of course the screen recording and the editing. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com where we have many different courses. You can purchase one at a time or have a subscription model giving you access to all the courses. Courses which are well organized have other resources like Excel files and PDF files to download and no commercials. Of tests of controls, recalling what tests of controls are. They're going to be the responsibility of management. Management setting up the tests of controls, the control system, often including some format of checks and balance and some separation of duties. You can imagine then how could we as the auditor go in and test the internal controls? A large part of it is going to be us going in and having inquiry, asking questions about the internal controls. We already have an idea of the general set of internal controls obviously. We as an auditor are going to say, hey, there's some set of internal controls that I have an idea of, some that would apply to basically any type of industry, some that might be specific to this particular type of industry. We want to then go in with our understanding of what we would think of as controls, make inquiries about what controls are in place. Obviously, many of those inquiries will be talking to top management as well as the people that are involved in basically regulating the internal control. So we'll get an idea of the internal controls. Now, you might be thinking, how is that a test on the internal controls? Well, of course, first thing we need to do is not the most reliable test to actually just get a map of the internal controls that should be in place. By management, who is the people that basically we are in essence reviewing. However, if we get an independent idea of what the internal controls are from management, we can compare and contrast it to see whether or not it lines up to basically our idea of internal controls or our idea of what assertions they should be basically putting controls in place for. And so we're going to get their idea of what the internal control is. We're going to basically be able to map that out to what we have. Now, of course, that doesn't test whether or not the internal controls are being put in place correctly or not. It just gives us an idea of what they're telling us. The internal controls should be in a narration type form, typically inspection of documents showing the performance of the control procedures. Now, remember, whenever we think about controls, we think about two sides of it. One, do you have internal controls? Do you have a good system of internal controls? Is it mapped out? Does it go along with the assertions that we would expect to be in place given your industry? And two, are they actually being implemented? So this would be more on the implementation side. Now we're going to say, OK, this is what we believe the internal controls are considering our inquiry. We know what the internal control system should look like. Now we're going to see, are they actually happening? Are they being put in place? We could do that with inspection of the documents showing the performance of the control procedures. We're digging into the documentation, not doing substantive testing now. Testing the controls, testing the procedures, testing the checks and balances. Observe the application of the control procedures. So we can go in and actually do observations to see if the control procedures, the checks and balances, the oversights are happening, the separation of duties are happening. So we're doing audit work that we would typically think of. You might think of a more substantive testing where we actually go out and do some observation here. But here, no, we're not doing testing of the account balances. We're doing testing of the controls because if we can ascertain that the controls are in place, are strong, then we can do less of the substantive testing there. So we're still at the facility, at the client's place instead of the homie office over at our auditor's office. But we expect to be able to spend less time over at the client's place over here by testing the controls as opposed to us doing a lot more testing over at the client's place, having them pulling invoices and doing other substantive type testing on the substantive level. And then we have the re-performance of the application of the control procedure by the auditor. So of course, if we want to test the controls, whether they're done well, we could re-perform the control in certain circumstances and see if we come out to the same result. Next, we're going to document the level of control risk achieved. Documentation may include working papers. So of course, we're going to put together our working papers as we do our testing as documentation. We're thinking about that documentation that we're going to be piling up the evidence. The controls are going to be a part of our evidence, not just the substantive testing. The controls are part of our evidence to verify and backup support our opinion. Internal control questionnaires. So we're going to have internal control questionnaires supporting our opinions and memorandum type of formats. We're going to have memo type of formats, a more narrative type of format that will be supporting our documentation as well.