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Unit 5: Evaluation of Internal Control System

it would be advisable to add explanatory note. The arrears of coverage by the questionnaire Notes
relate to:
1. Cash and Bank Receipts

2. System of Accounts in Branches and Factories
3. Cash and Bank Payments
4. Salaries and Wages
5. Purchases and Creditors

6. Sales and Debtors
7. Investments
8. Stocks
9. Fixed Assets

10. Borrowings
11. Share Capital
12. Loans and Advances.
Sample questions on some of the above mentioned areas could include:

1. Is an organization chart readily available?
2. Does the organization chart show a clear definition and allocation of duties and
responsibilities of officials and employees?

3. Is a chart of Accounts in use?
4. Is the accounting records kept up-to-date?
5. Are they balanced monthly?
6. Are control accounts kept in the general ledger in respect of all transactions where the
volume justifies it?
7. Are subsidiary records reconciled with the respective control accounts periodically?
8. Are daily returns and reports received from branches/factories for collections, sales and
dispatches, production and receipt of goods?
9. Is an Internal Audit Manual in use?
10. Is there reconciliation of proofs of collection with amounts banked?

11. Is purchasing centralized in the purchase department?
12. Are purchases made only from approved suppliers?

5.8.3 Methodology for Adoption while using the Questionnaire

The Auditors may obtain answers on separate sheets, duly indexed against the questions to
which they relate. Inevitably a standard format for a questionnaire may not be feasible for
universal applicability as individual variations may be required. The following methods could
be adopted:

1. Answers could be compiled by the auditor on the basis of his observations and personal
interaction with the auditee.

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