## Audit Testing Methods in an Automated Environment

The four methods used to test controls in an automated environment are summarized by the mnemonic IIO-R:

Method	Evidence Quality	Efficiency
Inquiry	Lowest	Highest (most efficient)
Inspection	Moderate	Moderate
Observation	Moderate	Moderate
Reperformance	Highest (most effective)	Lowest (most time-consuming)

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### Key Rules

1. Inquiry alone is never sufficient – it gives the least audit evidence. Always combine with at least one other method.

2. Reperformance gives the best audit evidence but is the most time-consuming and least efficient.

3. Inquiry + Inspection = most effective AND efficient combination in practice.

4. Which method to use is a matter of professional judgment, based on:

Risk assessment
Control environment
Desired level of evidence
History of errors/misstatements
Complexity of the business
Assertions being addressed

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### Quick Reference

```

Most Efficient ←————————————————→ Most Effective

Inquiry → Inspection → Observation → Reperformance

(least evidence) (most evidence)

```

Worked example

### Example 1

Example – Why inquiry alone fails: An auditor asks the IT manager: 'Are access rights reviewed periodically?' The IT manager says 'Yes, every quarter.' This is inquiry only. Without inspecting the actual access review logs or reperforming the access review, the auditor has no corroboration. The IT manager may be wrong, misremembering, or misrepresenting. Inquiry must be combined with inspection of the review logs.

### Example 2

Example – Reperformance: To test whether the depreciation calculation in the ERP is accurate, the auditor independently recalculates depreciation for a sample of assets using the same rates and methods. This is reperformance – it provides the highest level of assurance but takes significant time compared to merely inspecting the depreciation schedule.

⚠️ Common exam mistakes

Stating that inquiry gives 'no' evidence – it gives the 'least' evidence, not zero evidence. It is still used, just never in isolation.
Confusing 'most efficient' with 'most effective' – inquiry is most efficient (quick to perform) but least effective (weak evidence); reperformance is the opposite.
Forgetting that the choice of testing method is a matter of professional judgment – examiners often test whether students understand that no single method fits all situations.

Reference:

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Testing Methods in Automated Environment

Worked example

⚠️ Common exam mistakes