- This topic has 5 replies, 2 voices, and was last updated 3 years ago by
.
- Posts
“Steps to confirm prior year flowcharts and system notes
-Obtain system documentation from the client, potentially in the form of a procedure manual. Review this to identify any changes made in the last 12 months.”
maam i think this statement is basically saying that auditors should obtain any system documentation prepared by the interenal audit department during the ongoing year and this is what External auditor will use to compare against last year’s documentation, RIGHT MA’AM?
However i am addled about one thing, why does it say “potentially in the form of a procedure manual”? how is this any different from a normal system documentation?
A company does not have to have an IA department – so system documentation does not necessarily come from IA. The client could document systems in narrative notes and/or flowcharts and/or procedures manual. Or might use one method for sales – another method for purchases – another for payroll, inventory, capex, etc.
Procedures manual is useful because it spells out (so someone can follow) each step in a process.
I thought procedures manual could be prepared in any form narrative/ flowcharts/ questionnaires.
If narrative notes et al. are not ways in which procedures manual is prepared, then can you explain how is procedures manual any different from narrative notes?
Systems notes, flowcharts, questionnaires etc, etc are methods that the AUDITOR might used to document a client’s system. Sometimes the client will have documentation that is suitable for audit purposes.
A client might have one comprehensive procedures manual – or lots or procedures manual for different areas of the business:
– Employment procedures
– Work from home policies
– Communication policies
– Payment procedures
– Workplace guidelines
– Employee code of conduct
– Technology usage proceduresThere might be one “accounting procedures manual” – or separate ones for payroll – accounting for VAT, etc, etc.
The auditor isn’t simply going to put a copy of a client’s procedures manual(s) on the audit file and call that audit documentation – to be useful – the auditor has to document what is relevant to the auditor – i.e. information about the controls relevant to the preparation of the financial statements.
Ok so what i am understanding from this is that audit documentation could be prepared by IA department, which will preferably be in the form of systems notes/flowcharts/questionnaires and some element of procedures manual. this info can be directly used by External auditor.
Otherwise what else can happen is that client may not have IA department in which case External auditor from scratch has to read procedures manual compare it with actual systems and then make notes/flowcharts/questionnaires.
have i got it correctly?
Just because there isn’t IA doesn’t mean the external auditor starts from scratch. The financial accountant might prepare a procedures manual/narrative notes to assist accounts staff (in sales/purchases/payroll) to discharge their day-to-day duties. It the accounts department uses an “off-she-shelf” accounting software, it will come with “manuals” that might include graphics such as flowcharts.
If there is IA – then IA might prepare questionnaires – and these may be of use to the external auditor to use/adapt. If there is no IA the external auditor would have to start from scratch with questionnaires.
- You must be logged in to reply to this topic.