Chapter 9 Internal control

1. Control Environment - directors (2points); INEDS; management, organizational structure; assignment; human resource policies

2. Control Activities - approval & control of documents; controls over computerized applications; recalculating arithmetical accuracy of records; maintaining and reviewing control accounts (debtor and creditor ageing) and trial balances; bank reconciliation and budgetary controls; comparing the results of cash, security and inventory counts with accounting records, comparing internal data with external sources of information; Limiting physical access to assets and records eg locks

3. Why internal controls are insufficient?

4. Internal control problems in non-profit organisation

5. Internal control risk (SOAP SPAM)

-Segregation of duties

-organisation structure

-Authorization and approval

-Physical

-Supervision

-Personnel

-Arithmetic and accounting

-Management

6. Documenting internal controls system : narrative notes, flowcharts, organisation charts, internal control questionnaire (ICQ), Internal control evaluation questionnaire (ICE)

7. Computer Based Environment (client's system: input; processing; output; master file); (auditor's system: Audit software eg CAAT; test data; other techniques e embedded audit facilities)