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Dear sir,
After going through the chapter on internal controls, I seem to have some issues figuring out the correct tests of control to questions. Is there any technique I can use to be able to write tests of control to any control procedure?Also, is control recommendations same as “what control procedures need to be put in place”?
One more qn, what would be the test of controls to ensure,
1. Sales orders, GDNS, etc.. are sequentially numbered? Can we as an auditor run it in the system and see that if all documents ( order, GDNs, invoices etc) are linked that means that correct sequence of numbering was followed?2. What is the test of control for say, a copy of a document (say, GDN) is kept with the invoicing department, one with the warehouse etc?
Really sorry if this question is long and confusing but I find this area confusing!
Thanks.
To test a control, understand what the control is and check it is happening. Eg if the control is approval inspect documents to see they have been approves and/or watch the approval process taking place.
Control recommendations = what needs to be out in place.
1 Check that all are produced in sequential order (eg there might be a pad of document ready to be used. Sequential control only works if someone subsequently checks all are processed eg by filing copies in numerical order and identifying missing ones.
2 Look for them. They are presumably kept in a file and can be located. If tehy can’t be found, they presumably haven’t been retained.
@kengarrett said:
1 Check that all are produced in sequential order (eg there might be a pad of document ready to be used. Sequential control only works if someone subsequently checks all are processed eg by filing copies in numerical order and identifying missing ones.
What exactly do you mean by this sir?
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