It is now $18$ December $2023,$ and the audit team has started interim audit procedures. As part of this process, you are reviewing the planned tests of controls as set out by Anna and Jacob. An extract of the audit procedures from the workpapers is below:

Planned tests of controls

$1.$ Bank reconciliation controls testing

Account balance or class of transactions: Cash and cash equivalents

Control objective: To ensure that reconciling items between the bank statement balance and the cash ledger are identified on a timely basis.

Control description: At the start of every month, the finance accountant prepares a bank reconciliation in Excel for the past month, reconciling the balance between the bank statement and the cash ledger. The reconciliation is reviewed by the finance manager. Both the finance accountant and finance manager sign off the Excel

reconciliation for record$-$keeping.

Test of control: Check the bank reconciliations to ensure they have been prepared and reviewed.

$2.$ Purchase to pay controls testing

Account balance or class of transactions: Purchase to pay process

Control objective: To ensure all payments are supported by relevant business documentation and are authorised.

Control description: The accounts payable officer performs a three$-$way match of the item, quantities and pricing between the purchase order, goods received note and the invoice from the supplier before processing the invoice for payment. Where there are discrepancies, the accounts payable officer investigates and obtains an

explanation for the discrepancy and the relevant approval from the finance manager before processing.

Test of control: Select a sample of purchase orders and check these against the associated goods received note and invoice from the supplier.

It is now $20$ December $2023,$ and Jacob has completed the bank reconciliation controls testing. An extract of the workpaper has been provided below for your review. The tolerable deviation rate for the ASL audit engagement has been set at $5\%$ and the clearly trivial threshold has been set at $$28,000$

Bank reconciliation controls testing $($extract$)$

Findings: Out of a sample of five months selected for testing, the April $2023$ bank reconciliation had not been performed.

Conclusion: As the difference between the bank statement balance and the cash ledger was $$26,430,$ which is below the clearly trivial threshold, the bank reconciliation control has been operating effectively.

Questions

$1.$ Assess whether the two $(2)$ planned tests of controls are effective in obtaining sufficient appropriate audit evidence with specific reference to the relevance and robustness of the audit procedures.

$2.$ Explain the error in the bank reconciliation controls testing conclusion. Evaluate the findings and provide the correct conclusion.