Before starting the audit the auditor should review the system of internal control for the following consideration:
• To examine the weakness in the system if there is any.
• To consider the proposition of introducing test check to be performed during the course of audit.
• Determine exactly the extent of work to be performed so as to enable the auditor to express his opinion on the given set of accounts.
The effectiveness of the system in practice should be tested to form an opinion that whatever existed on the paper did exist in practical aspect also. A proper and effective system of internal control offers advantages such as saving of time for the auditor, reduction in cost of conducting audit and assurance to auditor of the reliability of the financial accounts. This review of the system of financial internal control would involve either oral questioning or use of written questionnaire for the audit of each aspect of business. It is advisable that the auditor should obtain a statement in writing abridging the details of internal controls in practice. It is interesting to note that the existence of a good internal control reduces to a great extent the work of the auditor but does not reduce his liability.
• To examine the weakness in the system if there is any.
• To consider the proposition of introducing test check to be performed during the course of audit.
• Determine exactly the extent of work to be performed so as to enable the auditor to express his opinion on the given set of accounts.
The effectiveness of the system in practice should be tested to form an opinion that whatever existed on the paper did exist in practical aspect also. A proper and effective system of internal control offers advantages such as saving of time for the auditor, reduction in cost of conducting audit and assurance to auditor of the reliability of the financial accounts. This review of the system of financial internal control would involve either oral questioning or use of written questionnaire for the audit of each aspect of business. It is advisable that the auditor should obtain a statement in writing abridging the details of internal controls in practice. It is interesting to note that the existence of a good internal control reduces to a great extent the work of the auditor but does not reduce his liability.