Can you please explain me SA 315 Testing of internal controls as specified in page no 4.31 of institute study material.
Please see the video in the auditing course on SA 315. Which part have you not understood? The auditor has to have knowledge of entity and its environment which includes entity's internal control system to assess the audit risk (which inlcudes control risk). If auditor can rely on internal controls then control risk is low. So to ensure the effectiveness of internal controls, auditor performs test of controls. It is at two levels - first to check the effectiveness of its design (procedural) and then the second level involves implementation of such controls designed (in depth examination)