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Hello Sir, the two of the ways that documenting the client internal control system are ICQ & ICEQ which the auditor get the answer from the client about the control take place.As these two type of the documenting are different from other type which the auditor directly assess the system and documentating at same time,is it mean the using both method above,the auditor need to assess the system more detail(test of control) then other method as the client might overstated the control which that not in place at all?
Thank you.I don’t think you need to be too concerned about the distinction – after the June 2019 exam the learning outcome in the syllabus will be simplified to just “Explain how auditors record internal control systems including the use of narrative notes, flowcharts and questionnaires.” – i.e. questionnaires in general.
An ICQ is just a list of questions to identify whether controls exist – “Is there segregation of duties between … and …?” “Are purchase invoices matched to goods received before they are paid?”, etc. A firm may use standard questionnaires for all audits and the member of the audit team simply runs through them and indicates Yes/No/N/A. So an ICQ simply documents controls.
An ICEQ seeks to evaluate the effectiveness of the key controls that the auditor may want to rely on. For example, in answer to question “can goods be received without authorisation?” a key control, might be that “All receipts of goods are agreed to a purchase order before a goods received note is raised”. The auditor would then have to test that control e.g. selecting a sample of GRNs and confirming that they are all referenced to a purchase order in order to conclude whether or not the control operated.
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