Which method is considered MOST effective for confirming the effectiveness of controls related to interest calculation in an accounting system?

Reperformance is considered the most effective method for confirming the effectiveness of controls related to interest calculation in an accounting system because it involves an independent execution of the same calculations to verify their accuracy. This approach ensures that the controls in place are functioning as intended, as the auditor or reviewer replicates the calculations or processes directly.

By reproducing the outcomes of interest calculations, the evaluator can ascertain whether the controls effectively prevent and detect errors or fraud. Reperformance provides concrete evidence about the reliability and accuracy of the control since it produces actual results that can be compared against expected outputs.

Other methods, while useful in certain contexts, do not provide the same level of assurance. For instance, a process walk-through involves understanding and documenting the flow of processes, but it does not test the actual computations. Observation allows for witnessing processes in real time, but it might miss errors that occur in computation. A documentation review entails examining existing records and procedures, yet it does not confirm whether the controls are currently functioning as intended. Thus, while these methods bring valuable insights, they do not match the direct validation provided by reperformance in confirming control effectiveness.