- 10 Marks
AA – L2 – Q31 – Internal Control Systems
Question
Internal Control Systems (ICS)
Required:
Discuss the usefulness of the different methods available to an auditor for ascertaining and recording an entity’s accounting and system of internal control.
Required:
Discuss the usefulness of the different methods available to an auditor for ascertaining and recording an entity’s accounting and system of internal control.
Answer
Inspection
The auditor can ascertain the working of an entity’s system through a review of the records and documents which the entity itself maintains. This may be through systems manuals, or flowcharts, possibly prepared by internal audit.
A further advantage is that they can help the auditor to identify internal controls on which he may wish to rely. If the preliminary evaluation indicates strong controls, the auditor can design and carry out tests of controls. If deficiencies are noted, the auditor can move directly to substantive testing and can report the deficiencies to management.
- Tags: Audit Procedures, Control Evaluation, Internal controls, System Documentation
- Level: Level 2
- Topic: Internal Control Systems
- Uploader: Samuel Duah