Topics List. Contact Us. Fundamentals of Auditing. Lesson Using a verification approach to the audit. A list of internal controls in existence and 4. Highlights any weaknesses.
Questionnaires to Evaluate Internal Controls
Construction of an ICQ I It is good practice when designing ICQs to state, as a brief introduction: a a list of control objectives which each sub-system under consideration should seek to achieve b any business considerations specific to the enterprise under review which should be taken into account.
The reason for this is essentially to highlight for the audit staff key areas for their consideration to the audit staff. II The questions in an ICQ should be designed to ascertain whether the control objectives are being achieved and should therefore cover such aspects as: a instructions given to staff in the performance of their duties b authorization procedures c documents and procedures used to originate transactions d recording procedures e sequence of procedures f custody procedures g relative independence of the persons involved at each stage of a transaction i.
Varying nature of goods purchased. Inventory and re-order levels should ensure efficient control. However, buying in bulk, with resulting higher inventory levels may be part of a company policy to reduce unit costs, in which case inventory obsolescence and storage cost problems may arise.
If yes, specify type of record kept and filing sequence. Internal Control Evaluation Checklists To overcome the above discussed possible shortcomings, many auditing practices have amended their approach to internal control evaluation by the adoption of a different type of document, Internal Control Evaluation Checklists ICEC.
The ICEC is designed to determine; whether desirable internal controls are present? Key questions are asked in an ICEC, the answers to which prompt further supplementary questions. Reference is made to a supporting flowchart which is the means of ascertaining the existing systems. This makes the ICEC document shorter and less complex, but it may require more skill and judgment on the part of the auditor to interpret the completed form.
I forward purchases controlled? I advances and loans controlled? Limitations of the effectiveness of Internal Control It is possible to reduce the volume of transaction testing required in conducting an audit if the internal controls are sound and are operating effectively, but it is not likely that an auditor will be able to rely on internal controls entirely.
This is because all control systems have inherent limitations such as: a The need to balance the cost of the control with its benefits page 73 b The fact that internal controls are applied to regular, recurring transactions, not one off year end adjustments or unusual transactions, which are often large and subject to error.
For example; the supervisor responsible for checking and authorizing overtime claims could collude with employees, to enable excess overtime payments to be claimed.
Abuse of authority might involve ordering personal goods through the firm. It is very easy for directors and managers of organizations of any size to instruct staff to bypass normal procedures such as the requirement for authorization for payments.
In practice, the training of auditors always involves a warning never to rely on internal controls entirely, no matter how effective they may appear to be. Next Lesson. Previous Lesson.Under Chapter of the Acts ofthe Comptroller is responsible for developing internal control guidelines for Commonwealth departments. As the Comptroller's business owners of internal controls, the Risk Management Team reviews and updates these guidelines which assist departments in developing Internal Control Plans based on a comprehensive assessment of risks that could impede the attainment of departments' goals and objectives.
Departments are expected to identify and implement policies and procedures to mitigate risks, especially those related to the prevention of fraud, waste and abuse. Departments should familiarize themselves with the documentation and tools for best practices provided in the categories below: overall Guidance for Internal Controls, tools to assist in the prevention and detection of Fraud, Waste and Abuse, best practices for departments receiving federal funds under the American Recovery and Reinvestment Act ARRAand the Internal Control Questionnaire ICQ which is a department's annual certification as to its compliance with applicable laws, regulations and policies regarding internal controls.
Internal Controls Under Chapter of the Acts ofthe Comptroller is responsible for developing internal control guidelines for Commonwealth departments. The National Association of State Comptrollers NASC Internal Control Self-Assessments tools assist in determining whether the proper controls are in place for various business processes, but should be evaluated for application under the user's unique circumstances.Internal controls are generally described in written policies that set forth the procedures that the nonprofit will follow, as well as who is responsible.
Example of a basic internal control : A policy that requires two signatures on a check is a basic internal contol.
Example of an internal control that every nonprofit can put into practice : A policy to lock the office door when no one is monitoring the entrance. Where should you start? Most internal controls are common sense — but not all those described in the resources below may make sense for your nonprofit. Stay up-to-date with the latest nonprofit resources and trends by subscribing to our free e-newsletters.Best Practices to Perform an ISMS Internal Audit based on ISO/IEC 27001
Member Login Search Keyword or Phrase. Sort by Relevance Most Recent. Internal Controls for Nonprofits. Similarly, the same person should not both prepare the payroll, and also distribute or have custody of the payroll checks. A policy to keep all cash in a locked drawer and to deposit cash and checks in the bank, soon after they are received. A policy to conduct a background check of employees who handle money, prior to hire and periodically throughout employment. Practice Pointers If your nonprofit uses checks, who has access to blank checks?
And who is authorized to sign them? Perhaps using other methods to transfer payments than check-writing is a risk management strategy to consider. Does everyone in your nonprofit including board members know how money moves through the organization? Creating a flowchart will help everyone visualize the journey, which can also prompt discussion about who is responsible at which stages, and where internal control weaknesses could exist.
Adopting a written policy helps everyone know what the expectations are, such as for requesting reimbursements. Other examples described here: Protecting assets with sound internal controls Minnesota Council of Nonprofits Two easy steps even very small nonprofits can take to strengthen internal controls are: 1 conduct a "surprise internal audit" - An unexpected examination of how cash and checks flow through the organization, and what vendors are receiving payments for, can deter fraudulent schemers; 2 Make sure that a second person, besides the designated "bookkeeper," sees bank statements.
This offers another layer of transparency and protection to the organization. You can read more about these two easy strategies here: How to lessen segregation of duties problems in two easy steps CPA Scribo This is very basic: Define who is responsible for what functions in your organization.
It includes descriptions of the expectations for financial reporting and internal control procedures The National Endowment for the Arts, Office of the Inspector General.By asking key questions, IACS often uses an ICQ as a starting point and then supplements it with other information gathering and control evaluation techniques, such as flowcharting and documentation review.
This ICQ is used to evaluate internal controls associated with how revenue is generated, received, recorded, safeguarded, summarized, deposited, and reported. This ICQ is used to evaluate internal controls associated with the confidentiality, integrity, and security of University payment card transactions. This ICQ is used to evaluate internal controls associated with how inventory is physically safeguarded and secured, organized, current not obsolete and not excessive based on the usage or salesvalued, and recorded.
Revenues and Receipts Payment Card Data Security Inventory for Resale This ICQ is used to evaluate internal controls associated with how revenue is generated, received, recorded, safeguarded, summarized, deposited, and reported. Key Questions Does the Unit have procedures which accurately record revenue from all sources: cash, check, credit card charge, internal charge, etc.?
Is separation of duties adequate? Is cash adequately safeguarded? Is there an adequate audit trail and reconciliation procedure for timely detection of shortages? Is this data reconciled to the revenue that is posted to the Organization's Accounting System? General Documentation of every sale of goods or services with a cash register entry, a pre-numbered receipt form, an invoice, etc. Customers are issued a duplicate. A method for accumulating revenue such as a point of sale POS system.
Balancing procedures, e. Sales are reconciled to deposits. Deposits are reconciled monthly to the Organization's accounting reports. Accounting for pre-numbered forms. Periodic management review of revenue data for trends such as: unexplained variations in sales or sales of certain product lines, changes in ratios such as inventory turnover or shrinkage, comparison of budgeted to actual revenue, etc.
Cash Delegation of authority to receive cash to a specific person s. Cash receiving and cash accounting are separated. Adequate physical security over cash during both storage and transfer.
Timely deposits, made intact with no cash receipts retained, borrowed, or expended. Validation of the deposit slips. Comparison of credits on the Organization's accounting report with the validated deposit slips. Cash shortages are identified, followed, and collected.
Cash overages are identified and deposited. Adequate supervision over cashiers, including cash handling, cash register balancing, and monitoring overs and shorts.The internal control policies and procedures templates include an 8 page internal control policy, internal control review procedures, Audit Committee responsibility descriptions, and our spreadsheets with over 1, internal controls covering both entity level controls and accounting controls.
The internal control manual templates are included in the Accounting and Management Template Library or licensed separately.
The internal control templates are delivered in both text and spreadsheet formats, so you can easily develop and print internal control checklists and questionnaires. You can also use the spreadsheets to evaluate compliance with your internal control system for reporting to governing authorities. Our internal controls for nonprofit organizations include templates for grants covering allowable costs, program income, property and equipment acquisition, matching, procurement, reporting, contributions, donations, and funds availability.
Also included in our nonprofit internal controls are detailed donation collection and cash handling procedures for events and churches. Following are examples from the Copedia internal controls module.
First, a screen shot from the Internal Control Assessment Spreadsheet and second, an example checklist of Asset controls in text format:. A must have for project related businesses.Design the betting pool exactly as you want by using the questionnaire editor. You can add as many questions as you need, define the best layout to present them and customize the color of the buttons.
You can see the changes being made as you edit the betting pool. Use different types of questions: Open answer, closed-answer buttons, sort options, multi-answer, dropdown, auto-complete lists, and rating options. Complement them with photos and videos.
Reward the users who predict the results of the competition correctly by entering them in a final sweepstakes. Use the winner-selection tool to carry out the sweepstakes and obtain a certificate of validity. Create a contest for each day and present them on the same page.
Activate global ranking to boost competitiveness among users. Viralize the contest by giving more chances of winning to those users who recruit the most friends.
Reward participation in the betting pool by giving users a coupon or promotional code which they can redeem in your store or establishment. Register now and access the control panel from where you can create and configure a complete predictions poll, see all the options and preview exactly how it will look upon publication.
If you continue to browse we will consider you to have accepted their use. You can change the set up or obtain more information here.
INTERNAL CONTROL QUESTIONNAIRES
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Promotions group Create a contest for each day and present them on the same page. Sweepstakes Carry out a sweepstakes among all the users who correctly predict the result of the competition. Recruiters Viralize the contest by giving more chances of winning to those users who recruit the most friends. Coupons Reward participation in the betting pool by giving users a coupon or promotional code which they can redeem in your store or establishment.I found it useful to be able to leave clients with the handout knowing that I just maximised my chances of being left a positive review.
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