Testing the Operating Effectiveness of Internal Controls
Learn how to determine whether internal controls are operating consistently and effectively—not merely whether they appear adequate on paper.
This live, instructor-led webinar provides auditors, internal control professionals, compliance officers, and risk managers with practical methods for testing entity-level controls, transaction-level controls, and IT general controls. Participants will learn how to select appropriate testing procedures, determine sample sizes, evaluate audit evidence, document exceptions, assess control deficiencies, and communicate meaningful conclusions.
Participants can earn 4 NASBA CPE credits while strengthening their ability to perform risk-based internal control testing.
Why Operating Effectiveness Matters
Effective internal control testing provides reasonable assurance that important controls are performing as management intended. Poorly planned testing may fail to identify unauthorized transactions, financial reporting errors, compliance violations, technology risks, or operational breakdowns.
A control should not be considered effective merely because:
- A policy exists.
- The control owner says the control was performed.
- A document contains a signature or approval.
- One successful example was identified.
- No known error or fraud has occurred.
Auditors need sufficient, appropriate evidence demonstrating that the control consistently addressed the relevant risk. This webinar gives participants the methods needed to obtain and evaluate that evidence.
Why Attend?
Organizations frequently devote substantial resources to documenting internal controls without obtaining reliable evidence that those controls actually work. Weak testing can create false assurance, leave significant risks undetected, and result in unsupported audit conclusions.
This webinar will help participants:
- Improve the reliability of internal control testing.
- Develop testing procedures that directly address control objectives.
- Recognize weak, incomplete, or unreliable evidence.
- Evaluate exceptions consistently.
- Reduce overreliance on inquiry and management representations.
- Strengthen SOX, financial reporting, compliance, and operational audits.
- Produce audit documentation that withstands management, regulator, and external auditor review.
Register Now
Strengthen your ability to determine whether internal controls work consistently in real-world operations.
Register for Testing the Operating Effectiveness of Internal Controls to earn 4 CPE credits and gain practical testing techniques that can be applied immediately to internal audits, SOX assessments, compliance reviews, and operational audits.
Details on Event Presentation
Offered every eight weeks on Tuesdays at 10:00 a.m. to 2:30 p.m. Central Time in four CPE-Credit event.
We can schedule private events on your timetable for two or more attendees.
NASBA Program Disclosure
Program Level of Understanding: Intermediate to Advanced
Prerequisites: Participants should come with a knowledge of internal control frameworks.
Advance Preparation: None.
Delivery Format: On-site Training (Group-Live); Seminar (Group-Live)
NASBA Field(s) of Study: Auditing
CPE Credits: 4, based on 50 minutes of instruction per hour.CPE Event Highlights
A control can be properly designed and still fail during daily operations. Testing operating effectiveness determines whether the control was performed by the right person, at the required frequency, using appropriate information, and with sufficient evidence of review.
This webinar takes participants beyond walkthroughs and control descriptions. It addresses the evidence auditors need to conclude whether controls operated effectively throughout the period under review.
Participants will examine how to:
- Connect control objectives to specific testing procedures.
- Determine whether controls operated consistently during the testing period.
- Select tests of inquiry, observation, inspection, and reperformance.
- Evaluate the competence and authority of the control owner.
- Test manual, automated, and IT-dependent manual controls.
- Select populations, samples, and testing periods.
- Determine whether evidence supports the performance of a control.
- Investigate control exceptions and identify their causes.
- Distinguish isolated exceptions from broader control failures.
- Document defensible conclusions and actionable recommendations.
Learning Objectives
Upon completing this webinar, participants should be able to:
- Explain the difference between design effectiveness and operating effectiveness.
- Identify the elements that must be present for a control to operate effectively.
- Match control risks and objectives to appropriate testing procedures.
- Apply inquiry, observation, inspection, and reperformance appropriately.
- Evaluate the reliability and sufficiency of control-testing evidence.
- Test manual, automated, and IT-dependent manual controls.
- Define the control population and select an appropriate testing period.
- Develop a risk-based sampling approach.
- Evaluate deviations, exceptions, and contradictory evidence.
- Determine whether compensating controls reduce the effect of a deficiency.
- Document testing procedures, results, and conclusions.
- Communicate control deficiencies and practical corrective actions.
Key Issues on the Agenda
1. Understanding Operating Effectiveness
- The relationship between risks, objectives, and controls
- Design effectiveness versus operating effectiveness
- What it means for a control to operate as intended
- The effect of control frequency, precision, and ownership
- Testing controls at a point in time versus over a period
2. Planning the Control Test
- Understanding the control and its objective
- Identifying the control owner and responsible reviewer
- Defining the population subject to the control
- Selecting the period covered by testing
- Considering the risk and significance of the control
- Developing procedures that address the relevant control attributes
3. Selecting Testing Procedures
- Inquiry
- Observation
- Inspection of documentation
- Reperformance
- Walkthroughs and their limitations
- Combining procedures to obtain sufficient evidence
- Determining when inquiry alone is inadequate
4. Testing Manual and Automated Controls
- Manual control performance
- Management review controls
- Automated application controls
- IT-dependent manual controls
- Reports and information used in control performance
- IT general controls supporting automated processes
- Evidence retained by systems and control owners
5. Sampling and Evidence
- Selecting representative samples
- Matching sample size to control frequency and risk
- Random, systematic, and judgmental selection
- Evaluating the completeness of the population
- Testing controls that operate daily, monthly, quarterly, or annually
- Assessing the relevance, reliability, and sufficiency of evidence
6. Evaluating Exceptions and Deficiencies
- Distinguishing an exception from a control failure
- Investigating the nature and cause of deviations
- Expanding testing when exceptions are identified
- Evaluating compensating and mitigating controls
- Considering the potential effect of a deficiency
- Reaching an overall conclusion about operating effectiveness
7. Documentation and Reporting
- Preparing clear testing workpapers
- Connecting evidence to the testing conclusion
- Avoiding unsupported or overly broad conclusions
- Describing the condition, cause, risk, and consequence
- Developing practical corrective recommendations
- Communicating results to management and governance
Summary of the Subject Matter
Testing operating effectiveness is the process of determining whether an internal control was performed consistently, by qualified personnel, at the required frequency, and with sufficient precision to address the identified risk.
This 4-CPE webinar provides a practical framework for planning, performing, documenting, and reporting internal control tests. It covers entity-level controls, transaction controls, management review controls, automated controls, and IT general controls.
Participants will learn how to move beyond inquiry and check-the-box testing by obtaining persuasive evidence about actual control performance. The course also addresses sampling, population completeness, control exceptions, compensating controls, deficiency evaluation, and audit documentation.
The objective is to help attendees reach supportable conclusions about whether controls operated effectively throughout the period being examined.