Question

Which of the following best describes a "dual-purpose test" as discussed in class (i.e., a test...

Which of the following best describes a "dual-purpose test" as discussed in class (i.e., a test of documents)?  

a. Functions as an analytical procedure and a financial test
b. Functions as substantiation of a financial balance and also a test of internal controls
c. Substantiates an ending balance and the transactions making up the balance
d. Addresses two different accounts
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Answer #1

DUAL PURPOSE TEST is when audit procedures are classified both as substantive tests and tests of controls. When an audit procedure provides both types of evidence it is a dual purpose test.

b)Functions as substantiation of a financial balance and also a test of internal controls

A dual-purpose test is an audit procedure that is used as both a test of controls and a substantive test. This test improves the efficiency of an audit, since two testsare being combined into one procedure

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