For each company, the internal control and audit programs may vary, but below is a diagram of how these elements are applied within organizations and the utility they provide for management analysis and for decision-making by senior managers. and management.
Internal control and audit program for the company
To validate the information that the company has provided with respect to the available item, the audit and internal control program is established, developing the points described below:
1. Review and evaluate the strength and / or weaknesses of the Internal Control system and based on said evaluation:
- Carry out compliance tests and determine the extent and timing of the applicable audit procedures according to the circumstances Prepare a memorandum or report with the result of the work, the conclusions reached and the comments on the strength and / or weaknesses of the control internal, requiring immediate action or may be appropriate points for the recommendation letter.
2. Plan and carry out substantive tests of the figures shown in the financial statements and that are necessary according to the circumstances.
Description:
The available is defined as the group that includes the accounts that register the immediate, total or partial liquidity resources, which the economic entity has and can use for general or specific purposes, within which we can mention the cash, the deposits in banks and other financial entities.
Handling the Available.
- Clearly determine the functions, responsibilities and obligations of the personnel who are in charge of the custody of the cash and the authorization of previous payments In search of greater security when handling cash on hand, it is advisable to determine a maximum amount for individual payments Control who and how the payments are made Payments made by the cashier Make contracts backed with guarantee policies for the safekeeping of cash.
Compliance tests:
These seek to obtain evidence on internal control procedures, in which the auditor will find confidence in the system to determine if they are being applied in the established manner.
The auditor will seek to ensure the existence of the control, the effectiveness with which that control is performed, and to determine whether the controls have been applied continuously throughout the period.
Transaction Type: Verify the cash inflow:
A. The objective is to determine if the established controls are operating as planned and to observe the existence and responsible use of equipment used in the cash receipt process.
B. Observation of the work carried out by those in charge of both the general cash and the petty cash, to determine if it complies with the cash receipt procedures and that its handling is in accordance with the management of previously established company policies.
C. Conducting interviews with the Company's personnel to determine if the procedures described by them in terms of cash agree with those determined in the function manuals and internal control plans.
D. Repetition of the internal control procedures in order to determine if the cash handling process went through the respective controls that allow total veracity and responsibility of the person in charge of managing the general and petty cash.
- Confirm the carrying of cards for visitors in order to avoid confusion within the organization Observe that there is really separation of functions between who authorizes the payment of an account and the cashier Examine the existence of documents that support the daily cash counts of cash as a means of controlling the entrances and exits of this, determining compliance with pre-established rules for its management Observe the income requirements of personnel to the treasury units to determine if additional controls are needed to give greater security to the handling of cash general, or direct access to the offices of people who handle petty cash.Verification of the elaboration of adjustments to bank accounts when the respective reconciliations have been received, thus controlling the balances of the different accounts Verify the existence and application of an available management policy Determine the efficiency of the available policy Verify that the supports of the accounts registered as available are in order and in accordance with the legal provisions Observe if the credits in account of those available are properly recorded Check that there is a complete analysis of the management of available To identify faults and apply the necessary corrections Check if the information about the company's available, duly updated, is sent to the administration and those in charge within the company in a timely manner.Verify the existence of a manual of functions of the personnel in charge of the available accounts, as well as the knowledge and compliance with it by the employees.
It should be kept in a safe place, preferably by mechanical means, such as safe deposit boxes, important documents such as checkbooks, securities, cards with the signatures authorized to issue checks, security keys, etc.
Noun tests:
Objectives: Determine the correction of the balances.
A. Arithmetic Correction
- Add some relationships that the company presents and that could be included within the Audit working papers. Reconcile the auxiliaries with the balances of the accounts of the general ledger.
B. Existence or event, rights and obligations and valuation or assignment,
- Control all cash and negotiable instruments owned by the company until all funds have been counted, insist that the cash clerk be present during the count Obtain a receipt signed by the fund manager as proof that the funds were returned to the customer in full compliance, Ensure that all checks pending deposit are issued to the customer's order either directly or through endorsement.
- It is customary to confirm the balances on deposit in bank accounts as of the balance sheet date. For this purpose, a bank confirmation model is prepared, requested as part of the bank balance tests.
C. Correction and Inclusion:
- Carry out tests to make sure that all the items that should be included are and eliminate those items that should not be included.
* At the end of the year, it is considered essential that there is a cut-off of cash inflow and outflow transactions if the correct cash balance is to be presented on the balance sheet and that the financial statements reasonably reveal the financial information and the results of the operation.
- Review or prepare Bank reconciliations:
* Check the bank balances with the answers of bank confirmations.
* Verify the validity of the items that make up the reconciliation, such as deposits in transit and checks issued by the company and still pending payment by the bank, sometimes called checks in transit
* Examine bank statements in search of alterations or modifications of figures.
When internal control is deficient, the auditor may personally proceed to carry out the bank reconciliation.
- Obtain and use bank statements after the closing date:
* The company must request its bank to send account statements, which must be sent directly to the auditor.
* Upon receipt of the bank account statement dated after the closing date, and the checks paid in that interval and the notices of charges and credits, all the checks issued in the previous year are compared with the list of checks pending payment, as recorded in the end-of-period reconciliation.
* It also ensures that the deposits in transit in the end-of-period bank reconciliation have been credited by the bank as deposits in the post-closing statement, in addition to examining the bank account statement and other receipts in search of suspicious items.
- Track bank transfers:
* When a bank transfer occurs, several days will elapse before the check is paid by the bank on which it was issued. Therefore, the cash deposited according to the accounting records will be overestimated during this period, since the check will be included in the balance in which it was deposited and will not appear subtracted from the bank on which it was booked. In order to obtain evidence regarding the validity of the bank transfers or to verify errors or irregularities, a certificate of the checks is prepared at a date close to the closing date on the closing date.
- Prepare evidence of Cash:
* Obtain bank and book totals from bank statement and bank cash account, respectively.
* Obtain the items that are the reason for reconciliation from both the initial reconciliations of the balances and the final reconciliations of the balances.
* Determine the reconciliation items.
- Perform analytical reviews:
* Cash balances should be compared with budgeted expectations and studies of the reports of variations in the monthly cash budget should be conducted.
D. Presentation in the Financial Statements and Sufficient Disclosure.
Conduct investigations and inspect documentation for cash restrictions and liens.
Consider presentation of statements and disclosure with generally accepted accounting principles.
