Timing of testing 2689



  • I am interested in seeing when other companies perform their internal testing. We do it twice a year: interim and year-end. Interim testing is done in July/August so that we have the first half of the year from which to select samples. And we use a much bigger sample size for interim than year-end testing, so a bigger portion of our samples would come from the first half of the year. The thought is that by testing the 1H more heavily, we would identify ineffective controls and have time to correct it for year-end testing. Additionally, it is just impractical to perform the brunt of testing in Q4, as there are more competing priorities during that timeframe.
    Could you share your company’s practice? Thank you.



  • We follow a similar testing timing approach. However, we also incorporate the timing in the risk assessment process. If an account has a high risk of material misstatement, we focus most of our testing at year-end. For example, we test more balance sheet reconciliations as of 12/31 for the higher risk areas. Additionally, if an account is considered a low risk we will only perform interim testing using inquiry/observation. Finally, you should consult with your external auditor to determine if the timing impacts their reliance on your testing. That is assuming they place reliance on your work. Hope this helps.



  • I am interested in seeing when other companies perform their internal testing. We do it twice a year: interim and year-end. Interim testing is done in July/August so that we have the first half of the year from which to select samples. And we use a much bigger sample size for interim than year-end testing, so a bigger portion of our samples would come from the first half of the year. The thought is that by testing the 1H more heavily, we would identify ineffective controls and have time to correct it for year-end testing. Additionally, it is just impractical to perform the brunt of testing in Q4, as there are more competing priorities during that timeframe.
    Could you share your company’s practice? Thank you.
    We also follow this methodology.


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