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Checklist for Evaluating Internal Controls

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Checklist for Evaluating Internal Controls
Internal Controls can be easily evaluated by making use of a comprehensive questionnaire containing all pertinent components of the internal control system in place within the company or business unit. The idea of the internal control questionnaires is to provide auditors with wealthy information in regards to the controls in place and possible risky areas. “Internal control questionnaires are designed to help the audit team obtain evidence about the control environment and about the accounting and control procedures that are considered good error-checking routines. Answers to the questions, however, should not be taken as final and definitive evidence about how well control actually functions. Evidence obtained through the interview-questionnaire process is hearsay evidence because its source is the supervisor, not the person who actually performs the control work. This person could give answers that reflect what he or she believes the system should be rather than what it really is. The person can be unaware of informal ways in which duties have been changed or can be innocently ignorant of the system details. Nevertheless, interviews and questionnaires are useful when a manager tells of a weak feature. An admission of weak control is fairly convincing” (Lowers, et. Al 2007).
On Appendix A of this paper, an example of an Internal Control Questionnaire is provided. It is general by nature, but it can be easily customized to any company/industry or even department.
Control Environment
The Control Environment part of the questionnaire will give auditors an idea of how strong the corporate behavior is in regards to compliance to policies and procedures. It will also be used to verify how engaged management and employees are towards corporate policies and procedures. The auditor will be able to determine if management has

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