Method
Internal Control
Questionnaires (ICQs)
Or Internal Control
Evaluation
Questionnaires(ICEQs)
Flowcharts
Explanation
1) ICQs contains a list of
questions.
2) ICQs are used to assess
whether controls exist.
Whereas,
ICEQs test the effectiveness
of the controls.
A flowchart is a symbolic
diagram representing the
sequential flow of authority,
processes and documents.
Advantage
1) Questionnaires are quick
to prepare, which means
they are a timely method
for recording the system.
2) They ensure that all
controls present within the
system are considered and
recorded, hence missing
controls or deficiencies are
clearly highlighted by the
audit team.
1) Can present an entire
system of controls in a
single diagram.
2) Standard symbols make
it easy to see missing
controls.
Narrative Notes
A narrative is essentially a
written version of a
flowchart. It describes the
auditor's understanding of
the system of internal
control. A narrative is
prepared by following a
sequence of events for a
transaction through the
accounting process.
Narrative notes may be
prepared for less complex
systems of controls and may
be used with flowcharts to
document more complex
systems.
1) Simple to record.
2) Easy to understand
Disadvantage
1) Clients may be able to
mislead the auditor, as they
know a "Yes" answer is
required (so answers must be
verified).
2) ICQs may contain
questions on controls that are
not relevant.
3) Actual controls operated
by the client may not be
included in the ICQ. ICQs may
become a "tick box" exercise.
1) Difficult to change without
redrawing the whole chart.
2) Narrative notes may also
be needed.
1) May be cumbersome when
documenting complex
systems.
2) This method can make it
more difficult to identify
missing internal controls as
the notes record the detail
but do not identify control
exceptions clearly.