D is corrent because tests of controls are used to test the effectiveness of the design or operation of a control. The auditor’s examination of sales invoices for specific initials would be an example of a procedure which provides assurance concerning the effectiveness of the operation of a control.
A is incorrect because a test of balances is a type of substantive procedure. In this situation, a substantive procedure is not being performed.
B is incorrect because a dual-purpose test would involve both testing a control and substantive testing. In this situation, only the control and not the substantive aspect is being tested.
C is incorrect because substantive tests involve analytical procedures and tests of details of transactions and balances. An examination of sales invoices for specific initials would not be a substantive test.
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