Evaluating The Internal Control System-Fundamentals of Auditing-Lecture Notes, Study notes of Auditing

Download Evaluating The Internal Control System-Fundamentals of Auditing-Lecture Notes and more Study notes Auditing in PDF only on Docsity! Lesson 18 EVALUATING THE INTERNAL CONTROL SYSTEM Flow Charts and Internal Control Questionnaires: Use of the major symbols in flow charts The Document symbol Each document in the flowchart should have a vertical flow-line. Such vertical flow-lines represent a movement in time within a particular department. When the document is moved to another department, this movement in position will be represented by a horizontal line; departments are therefore listed across the page. Here the document is originated in Dept A. It is moved to Dept B, then Dept D and then Dept C. Note that only vertical and horizontal lines are used, never diagonal lines. The Operation symbol Various operations will be performed on a document. It will, for instance: be prepared, added up, used to prepare other documents, etc. Any operation, other than a check function, is represented by the cross symbol. Each operation symbol should be supported by a brief narrative explaining the nature of the operation. Invoice etc. Kamran totals the invoice Note that the operation symbol is positioned on a vertical flow-line. It should never appear on a horizontal flow-line since that would suggest in this case that Kamran totals the invoice while it is moving from one department to another. docsity.com The Information flow symbol Here one document is prepared from another. The movement of information to the sales invoice is shown by a dotted line. Such information flow-lines are always horizontal, never vertical. Note that flow-lines then continue for both the order and the invoice. Sales order Fauzia prepares an invoice from the sales order This example is wrong because: (a) no narrative exists to explain the nature of the operation; (b) the sales invoice has no flow-line, it disappears into thin air. Sales order Sales Invoice The Check symbol Sales Invoice Sattar totals the invoice Wajid checks the totals This example shows a simple check on a single document. Delivery Note Sales Invoice Pasha checks that all goods dispatched have been invoiced. This shows a check between two documents. Note the use of the information flow-line again and that both the delivery note and the sales invoice continue with vertical flow-lines of their own. docsity.com