Auditing Controls
... Before we are able to assess the internal controls of Begum PLC its important that we familiarise ourselves with the system they have adopted. ... I would asses the controls by using an internal control questionnaires, which should bring out the characteristics of the system. ... I would study the answers, which would indicate how well designed the internal controls are. Combined with the questionnaire, I would visit some of the retail outlets, and observe how the internal controls are applied. ... We would need to apply substantive testing if we found that the controls were ineffective, because we as auditors rely on the internal controls for the basis of our opinion. ... The internal controls of Begum PLC or any other organisation help management to safeguard its assets and provides assurance that there is: a) An effective and efficient operations. ... Internal controls create an atmosphere in which employees conduct their activities and duties. Where there are effective internal controls, competent people will be employed in positions and they will understand their responsibility and the limits of their authority. ... For example if the crime rate of an area where retail outlets were located was significantly different, controls should identify this and maybe allocate a higher budget for security. The controls can be preventive (i. ... The reason for assessing the internal controls determines if they are adequately designed, properly executed and as effective as we hoped they would be. ... So the auditor must genuinely satisfy himself that the internal controls, will help lead to a ‘true and fair’ view in the accounts. When the internal controls are set it should be cost effective as well as efficient. The managers who set the controls should take into consideration that if there were many weaknesses identified by the external auditor, he would be obliged to carry out substantial substantive testing. ... No matter how well designed the internal controls are or the extent to which the auditor tests the system, they will only provide a reasonable assurance and never an absolute for various reasons i.