Describe how audit procedures involving tests of controls can provide indirect evidence about whether financial statement account balances are free of material misstatement.

Internal Controls are tested by audit team through entering dummy entries and identifying the system restrictions. Observing the management behavior towards controls and investigating any flaw in the internal control.

Explanation:

Audit is a technical process as it involves detailed analysis of the controls that are in place in the organization. The management behavior towards those controls are very important as it is the management responsibility to ensure that all employees follow the internal controls and there is no breach in the control. The financial statements should be prepared in the finance department with only the relevant staff and there should not be access given to employees of other department so that there can be less risk for material misstatement.

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