Page 77 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes (b) The number of copies in which a document is raised or received.
(c) The intermediate stages set sequentially through which the document and the activity
passes.

(d) Distribution of the document to various section department or operations.
(e) Checking authorization and matching at relevant stages.
(f) Filing of the documents.
(g) Final disposal by sending out or destruction.

As a matter of fact a very sound knowledge of internal control requirements is imperative for
adopting flow charting technique for evaluation of internal controls, also it demands a highly
analytical mind to be able to see clearly the inter division of a job and the appropriate control at
relevant points.

Did u know? Various professional accounting bodies now recognize the fact that the
evaluation of internal control system helps in formulating an audit programme.
A flow chart is normally a horizontal one in which documents and activities are shown to flow
horizontally from section to section and the concerned sections are shown as the vertical column
head; in appropriate cases an individual also may be shown as the vertical column head. Care
should be taken to see that the first column head is devoted to the section or the individual
wherefrom a transaction originates and the placements of other column heads should be in the
order of the actual flow of the transaction. It has been stated earlier that a flow chart is a symbolic
representation the flow of activity and related documents through the section from origin to
conclusion. These can be sales, purchases, wages, production etc. Each one of the main functions
is to be linked with related functions for making a complete course. Purchase is to be linked with
sundry creditors and payments; sales with sundry debtors and collection. For actual drawing of
the flow chart, the auditor has to formulate his symbols to reflect the flow and the connected
details. There should be a direction of movement for the activity and documents, at several
stages new documents may be added, documents may be matched, annexed or destroyed; there
may be points for checking the documents. This will depend upon the details that the auditor can
get from the section head or by a process of verification on the basis of the rough flow chart.
Skinner an Anderson in their book “Analytical Auditing” has suggested the following symbols
for the use of auditors:

Symbols

Documents

Documents prepared

If copy made

Flow of documents

Used for next step

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