For many years intertal control questionnaires (I.C.Q.s) have provided the standard method of discovering the security features of a clients system of internal control, or the basis on which subsequent audits may be planned. The form of the I.C.Q may cary considerably in practice of questioning.
NOTE: The main queatins which are regarded as Internal Evaluation Questionnaire (CEQ) are for evaluation purposes and seen as the queation that embrace the smaller questionnaire sequentially following them.
ORGANISATIONAL AND GENERAL MATTERS
1. IS THE BUSINESS CONDUCTED IN AN ORDERLY AND PROFITABLE MANNER WITH PROPER PROTECTION FROM SIGNIFICANT ERROR OR FRAUD.
A. Is an-up-to-date chart maintained?
B. Are duties and responsibilities of the staff at all lever defined?
C. Are actual result regurally checked and compared with financial plan, bugets and cash flows forecasts be pre-prepared by the management?
D.I. Has the organisation an Interna Audit Department.
II. If so, to whom is it responsible?
E. Are accounting procedureslaid down (by manual etc) and how they are maintained?
F. Are there adequatestand-by arrangements in force to cover staff sickness etc or loss of accounting record (by fire etc)?
G. Are ther adequate procedures to check all management decisionshave been fully implemented?
2. CAN THE SECRETARIAL AND STATUTORY RECORDS BE IMPROPERLY MANIPLUATED OR MISAPPROPRATED
A. Is the company seal kept in safe custody and its use ontrolled?
B. Are all securities and security documents including share certificates, shareholders and debenture resgisters, dividends and internal warrants, minutes of important meetings, etc kept under approprate control?
C. Are all registers required by law maintained by the company and up-to-date?
D. Is the companys file at the company registry maintained up-to-date?
3. CAN FIXED ASSETS BE AQUIREDOR DISPOSED OF WITHOUT PROPER AUTHORITY OR RECORDING?
A. Is capital expenditure over certian limits subject to authority?
B. Is disposal of fixed assets subject to speacial approval by authority to approprate person.
C. Is there a capital expenditure/disposal budget if so, when it reviewed.
D. Is a resgister of fixed asset maintained and is this cheacked regularly against the actual assets?
E. Are records maintained for fixed asset disposal and scrapping etc.
F. Is the register of fixed assets regularly reconciled to the normal ledger?
G. Is there a laid down rate of depreciation of companys assets?
H. Are profits on disposal of fixed assets segregated?
I. Are documents on title kept in safe custody?
CAN IMPROPER ENTRIES BE MADE IN THE NORMAL LEDGER
A. Is the nominal ledger kept in safe custody?
B. Can unauthorised persons make entries in the nominal ledger?
C. Are all journal entries subject to scrutiny and authorisation by a responsible official?
D. Are all journal entries supported by approprate documentation?
PURCHASES AND TRADE DEBTORS
1. ORDERING: Can goods or services be ordered without being authorised?
A. Are purchase requisition prepared and approved by responsible officials?
B. Is there a seprate purchasing or buying department?
C. Are purchase order:
I. Issued for all purchases of goods and services authorised
II. Pre-numbered and all numbers accounted for
III. Completed with specifications of prices and terms?
D. Are purchase orders valued and cpmpared with existing budgets or other management information (like agreed list of suppliers with supply details)
E. Are purchase orders issued and copies:
I. Sent to goods inwards or recieveing department
II. Retaied in accounts department
F. Are orders authorised by approprate officials and what are their limits?
2. RECEIPT OF GOOD: Can liablities for goods and services be incurred without the goods delivered or services rendered and any record being raised?
A. Are all goods examined on arrival as to quantity and quality by speacially assigned staff and if so, how is it, how is it evidenced?
B. Are all goods receieved at a central receiving store?
C. Are goods received records:
I. Serially pre-numbered
II. Made out immediately on receipt of goods
III. Copies thereof made avaliable to:
. Purchasing department
. Accounts department
. Stock record department
. User department
3. RETURNS: Can liablilties be attracted for breturn goods?
A. Are goods returned records serially numbered and properly accounted for, made out immediately on return of goods to suppliers?
B. What arrangements are made to ensure:
I. Accounts and purchasing departments are notified
II. Credit notes are received
III. Whose duty is it to ensure that due credit is received?
4. PASSING INVOICES FOR PAYMENT: Can liablilities be omitted, wrongly recorded or wrongly charged?
A. On receipt are invoices compared with:
I. Original orders
II. Copies of goods received notes or records
B. Are invoices properly checked for payment with reference to goods received note and purchase orders as to-
III. Extensions and totals
C. Are invoices finally authorised for payment by authorised officials?
D. Are invoices passed for payment duly stamped or cancelled to prevent double payment
5. PURCHASE LEDGER: Can liabilities be inflated or omitted in the ledger?
A. Does the sytem ensure that all invoices received and approved are processed through the accounting system?
B. Is there a review of statement recieved for items which have not been processed into accounting records?
C. Are purchase ledger balances regularly reconciled with suppliers statements and outstanding items investigated.
D. Are debit items – discounts recevied, settlements, returns outwards – abd balances in the purchase ledger regularly reviewed?
E. Is a purchase ledger control account maintained?
F. Is the purchase ledger control account regularly compared with sum of individual purchase ledger balances by someone other than the ledger clerk?
G. Are invoices and credit notes processed in the accounting system only when authorised?
H. Is there adequate segregation of duties betwwen persons responsible for the duties reffered to above and other accounting operations?
STOCKS AND COSTING
1. CAN STOCK BE MISAPPROPRATED OR MISLAID
A. Are there satisfactory controls over the documentation covering receipt and issue of goods?
B. Are stocks stored in an orderly manner and readily identifiable?
C. Is there proper security covering the handling and the storage of stocks?
D. Are perpetual stock records maintained and if so, is the recording function separated from that for the handling of goods?
E. Are there regular stock-taking or continual stock checking and is there proper control over the adjustment of physical discrepancies?
G. Is there control over allowance made for:
I. Loss or abosrption of moisture
III. Off-cuts and wastages
IV. Stock shinkage?
H. Is there control over disposal of obsolete damaged and slow moving stocks.
2. CAN WORK-IN-PROGRESS BE OVERSTATED OR UNDERSTATED?
A. Is there any acceptable and consistent basis for charging material, direct labour and over heads?
B. Is work-in-progress subject to proper physical checks which are reconciledwith book records?