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Internal control to test for credit approval?

For the AUD section of the CPA exam, you should understand how the audit team would test whether customer orders were properly approved to purchase on credit. For testing internal controls, we would utilize attribute sampling, which uses yes or no type of attributes. So for this situation, we would look to say “Yes, the credit was approved” or “No, the credit was not approved”. The population would be all customer orders within the given period that required credit approval, and the audit team would sample from that population.


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  • What type of sampling method is used for controls testing?

    Attribute sampling will be used primarily for testing internal controls. Attribute sampling will test for seeking specific characteristics. The other type of sampling is variable sampling, which is used for substantive testing.

  • What type of sampling method used in substantive testing?

    Variable sampling is used in substantive testing. Variable sampling will be used as a quantitative measure for estimating dollar values balances. The other type of sampling is attribute sampling, and that will be primary used in test of controls.