AUD 3 Internal Control 18 - 2 Documentation of Internal Control Structure - ICQ Flashcards
Internal Control Questionnaire (ICQ)
Yes (strength) / No (weakness)
questions covering all control activities:
A well-designed questionnaire will include questions related to each of the different types of control activities (from the PRAISE mnemonic) that may be utilized in an internal control structure.
There is no perfect questionnaire that can be memorized for the exam, but the following list includes questions that can be adapted to individual TBS types of questions (these questions should be made more precise by referring to documents and personnel that are used in the specific department that is being tested).
For each of the six activities, two potential questions are provided, since recommended solutions usually have contained around 12 questions spread over all the activities (PRAISE):
PRAISE • Physical controls • Recording • Authorization • Independent checks • Segregation of duties • Evaluate performance
• Segregation of duties (ARCC)
Internal Control Questionnaire (ICQ)
Yes (strength) / No (weakness)
questions covering all control activities:
A well-designed questionnaire will include questions related to each of the different types of control activities (from the PRAISE mnemonic) that may be utilized in an internal control structure.
There is no perfect questionnaire that can be memorized for the exam, but the following list includes questions that can be adapted to individual TBS types of questions (these questions should be made more precise by referring to documents and personnel that are used in the specific department that is being tested).
For each of the six activities, two potential questions are provided, since recommended solutions usually have contained around 12 questions spread over all the activities (PRAISE):
PRAISE • Physical controls • Recording • Authorization • Independent checks • Segregation of duties • Evaluate performance
• Segregation of duties (ARCC)
Internal Control Questionnaire (ICQ)
PRAISE • Physical controls • Recording • Authorization • Independent checks • Segregation of duties • Evaluate performance
• Segregation of duties (ARCC)
o Authorization
o Recording
o Custody of assets
o Comparison
Internal Control Questionnaire (ICQ)
PRAISE • Physical controls • Recording • Authorization • Independent checks • Segregation of duties • Evaluate performance
• Segregation of duties (ARCC)
o Authorization
o Recording
o Custody of assets
o Comparison
Internal Control Questionnaire (ICQ)
PRAISE • Physical controls • Recording • Authorization • Independent checks • Segregation of duties • Evaluate performance
• Physical controls
– Is proper security maintained over valuable department assets? Are there adequate safeguards over unused documents?
• Recording – Are transactions documented as to all relevant terms and descriptions? Are documents prenumbered and periodically accounted for?
• Authorization
– Are transactions authorized by personnel at least one level above the request level? Are the third parties involved in transactions approved in advance?
• Independent checks
– Are documents compared to verify their agreement before transactions are executed? Are records periodically reconciled to related documents?
• Segregation of duties
– Is the principal function of the department (Authorization, Recording, or Custody) independent of each of the other two functions?
• Evaluate performance
– Are there written department policies and procedures? Are unusual or uncompleted transactions periodically investigated?
Internal Control Questionnaire (ICQ)
PRAISE • Physical controls • Recording • Authorization • Independent checks • Segregation of duties • Evaluate performance
• Physical controls
– Is proper security maintained over valuable department assets? Are there adequate safeguards over unused documents?
• Recording – Are transactions documented as to all relevant terms and descriptions? Are documents prenumbered and periodically accounted for?
• Authorization
– Are transactions authorized by personnel at least one level above the request level? Are the third parties involved in transactions approved in advance?
• Independent checks
– Are documents compared to verify their agreement before transactions are executed? Are records periodically reconciled to related documents?
• Segregation of duties
– Is the principal function of the department (Authorization, Recording, or Custody) independent of each of the other two functions?
• Evaluate performance
– Are there written department policies and procedures? Are unusual or uncompleted transactions periodically investigated?
Internal Control Questionnaire (ICQ)
• Segregation of duties
– Are the principal functions of each process, authorization, recording, custody, and comparison (ARCC) independent of one another?
o Authorization – Are transactions authorized by personnel at least one level above the request level? o Recording – Are transactions documented as to all relevant terms and descriptions? Are documents prenumbered and periodically accounted for? o Custody of assets – Is custody limited to those with a need to have access? Are those with access subjected to bonding or appropriate background checks? o Comparison – Are physical assets periodically reconciled to recorded amounts? Are normal activities, such as bank deposits, subject to comparisons of recorded amounts to support documents, such as comparing daily deposits to remittance listings or reconciling amounts in cash registers?
Internal Control Questionnaire (ICQ)
• Segregation of duties
– Are the principal functions of each process, authorization, recording, custody, and comparison (ARCC) independent of one another?
o Authorization – Are transactions authorized by personnel at least one level above the request level? o Recording – Are transactions documented as to all relevant terms and descriptions? Are documents prenumbered and periodically accounted for? o Custody of assets – Is custody limited to those with a need to have access? Are those with access subjected to bonding or appropriate background checks? o Comparison – Are physical assets periodically reconciled to recorded amounts? Are normal activities, such as bank deposits, subject to comparisons of recorded amounts to support documents, such as comparing daily deposits to remittance listings or reconciling amounts in cash registers?
Internal Control Questionnaire (ICQ)
Normally, it is possible to identify at least one document, record, or asset to fit each question.
Thus, a questionnaire involving the production cycle might ask, “Is proper security maintained over work-in-process inventories?” One involving the payroll cycle might ask, “Is proper security maintained over signature plates?”
Internal Control Questionnaire (ICQ)
Normally, it is possible to identify at least one document, record, or asset to fit each question.
Thus, a questionnaire involving the production cycle might ask, “Is proper security maintained over work-in-process inventories?” One involving the payroll cycle might ask, “Is proper security maintained over signature plates?”
