Q2 Q4

Question 1

Routines - Dummy Transaction Analysis

Answer 1

This routine involves simulating transactions within the company’s systems to assess the accuracy and effectiveness of controls related to cost management and stock control.
Using this routine will help internal auditors pinpoint any discrepancies or weaknesses in the recording and monitoring of costs and stock levels.
Example - Auditors can make dummy purchases to test whether inventory records are updated accurately and promptly.
The results will help identify gaps in controls and highlight areas for improvement.

Question 2

Routines - Walkthrough Testing

Answer 2

Involves tracking a transaction or process all the way through to understand how controls work and identify and weaknesses.
Inter auditors can conduct walkthroughs of key processes such as purchases, inventory management, and cost allocation.
By following the flow of transactions, auditors can identify control gaps and areas of potential fraud or error.
Example - Auditors can walkthroughs the process of recording inventory receipts to identify and lapses in stock control procedures.
Result - Help inform recommendations for strengthening controls and improving operational efficiency.

Question 3

Routines - Physical Stock Checks

Answer 3

Process of physically counting and making sure the inventory matches with the records.
Internal Auditors can perform surprise inventory counts at different places and compare results to the recorded inventory levels in the system.
If there are any differences it could be down to theft, mistakes, or mismanagement.
By fixing these differences the company can make sure the inventory records are accurate and reduce the risk of losing stock.