All 18 Internal Controls Evaluation questions
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What is the control environment and why is it foundational? What is a walkthrough test? What is the difference between preventive and detective controls? How does the auditor obtain an understanding of internal control? What are entity-level controls versus process-level (transaction) controls? What is the difference between manual and automated controls? When does the auditor decide to test controls versus take a fully substantive approach? How do you document the understanding of internal controls? What are compensating controls and how do they affect the audit? What is the difference between a deficiency, a significant deficiency, and a material weakness?
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Auditing & Assurance › Internal Controls Evaluation

What is the difference between design effectiveness and operating effectiveness?

Intermediate

Answer

Design effectiveness means a control, if operating as intended, would prevent or detect material misstatements. Operating effectiveness means the control actually operated as designed throughout the relevant period. The auditor first evaluates design (and implementation), then, if relying on the control, tests operating effectiveness across the period.
Real-world example A well-designed approval control (design) is then tested across many transactions to confirm it consistently operated (operation).

Common follow-ups: Can a control be well-designed but not operating? | When must operating effectiveness be tested?

Audit Evidence & Procedures Audit Sampling Internal Controls Evaluation
All 18 Internal Controls Evaluation questions