types of internal controls
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7/30/2019 Types of Internal Controls
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
General Controls Yes No N/A Comments
1. Chart of accounts
2. Accounting procedures manual
3. Organizational chart to define responsibilities4. Absence of entries direct to ledgers
5. Posting references in ledgers
6. Review of journal entries
7. Use of standard journal entries
8. Use of prenumbered forms
9. Support for all journal entries
10.Access to records limited to authorized persons
11.Rotation of accounting personnel
12.Required vacations
13.Review of system at every level
14.Appropriate revision of chart of accounts
15.Appropriate revision of procedures
16.Separation of recordkeeping from operations
17.Separation of recordkeeping from custodianship
18.Record retention policy
19.Bonding of employees
20.A conflict of interest policy
Cash Funds Controls Yes No N/A Comments
1. Imprest system
2. Reasonable amount
3. Completeness of vouchers
4. Custodian responsible for fund
5. Reimbursement checks to order of custodian
6. Surprise audits
7. No employee check cashing
8. Physically secure
9. Custodian has no access to cash receipts
10.Custodian has no access to accounting records
1Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Cash Receipts Controls Yes No N/A Comments
1. Detail listing of mail receipts
2. Restrictive endorsement of checks
3. Special handling of postdated checks4. Daily deposit
5. Cash custodians bonded
6. Cash custodians apart from negotiableinstruments
7. Bank accounts properly authorized
8. Handling of returned NSF items
9. Comparison of duplicate deposit slips with cashbook
10.Comparison of duplicate deposit slips with detailA/R
11.Banks instructed not to cash checks to company
12.Control over cash from other sources
13.Separation of cashier personnel from accountingduties
14.Separation of cashier personnel from creditduties
15.Use of cash registers
16.Cash register tapes
17.Numbered cash receipt tickets
18.Outside salesmen cash control
19.Daily reconciliation of cash collections
2Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Cash Disbursements Controls Yes No N/A Comments
1. Numbered checks
2. Sufficient support for checks
3. Limited authorization to sign checks4. No signing of blank checks
5. All checks accounted for
6. Detail listing of checks
7. Mutilation of voided checks
8. Specific approval of unusually large checks
9. Proper authorization of persons signing checks
10.Control over signature machines
11.Check listing compared to cash book
12.Control over interbank transfers
13.Prompt accounting for interbank transfers
14.Checks not payable to cash
15.Physical control of unused checks
16.Cancellation of supporting documents
17.Control over long outstanding checks
18.Reconciliation of bank account
19.Independence of person reconciling bankstatement
20.Bank statement direct to person reconciling
21.No access to cash records or receipts by checksigners
3Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Investments Controls Yes No N/A Comments
1. Proper authorization of transactions
2. Under control of a custodian
3. Custodian bonded4. Custodian separate from cash receipts
5. Custodian separate from investment records
6. Safety deposit box
7. Record of all safety deposit visits
8. Access limited
9. Presence of two required for access
10.Periodic reconciliation of detail with control
11.Record of all aspects of all securities
12.Availability of brokerage advices, etc.
13.Periodic internal audit
14.Securities in name of company
15.Proper segregation of collateral
16.Physical control of collateral
17.Periodic appraisal of collateral
18.Periodic appraisal of investments
19.Adequate records of investments for applicationof equity method
4Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Accounts Receivable and Sales Controls Yes No N/A Comments
1. Sales orders prenumbered
2. Credit approval
3. Credit and sales departments independent4. Control of back orders
5. Sales order and sales invoice comparison
6. Shipping invoices prenumbered
7. Names and addresses on shipping invoice
8. Review of sales invoices
9. Control over returned merchandise
10.Credit memoranda prenumbered
11.Matching of credit memoranda and receivingreports
12.Control over credit memoranda
13.Control over scrap sales
14.Control over sales to employees
15.Control over C.O.D. sales
16.Sales reconciled with cash receipts and A/R
17.Sales reconciled with inventory change
18.A/R statement to all customers
19.Periodic preparation of aging schedule
20.Control over collections of written-off receivables
21.Control over A/R write off, e.g., properauthorization
22.Control over A/R written off, i.e., review forpossible collection
23.Independence of sales, A/R, receipts, billing, andshipping personnel
5Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Notes Receivable Controls Yes No N/A Comments
1. Proper authorization of notes
2. Detailed records of notes
3. Periodic detail to control comparison4. Periodic confirmation with makers
5. Control over notes discounted
6. Control over delinquent notes
7. Physical safety of notes
8. Periodic count of notes
9. Control over collateral
10.Control over revenue from notes
11.Custodian of notes independent from cash andrecordkeeping
6Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Inventory and Cost of Sales Controls Yes No N/A Comments
1. Periodic inventory counts
2. Written inventory instructions
3. Counts by noncustodians4. Control over count tags
5. Control over inventory adjustments
6. Use of perpetual records
7. Periodic comparison of G/L and perpetual records
8. Investigation of discrepancies
9. Control over consignment inventory
10.Control over inventory stored at warehouses
11.Control over returnable containers left withcustomers
12.Preparation of receiving reports
13.Prenumbered receiving reports
14.Receiving reports in numerical order
15.Independence of custodian from recordkeeping
16.Adequacy of insurance
17.Physical safeguards against theft
18.Physical safeguards against fire
19.Adequacy of cost system
20.Cost system tied into general ledger
21.Periodic review of overhead rates
22.Use of standard costs
23.Use of inventory requisitions24.Periodic summaries of inventory usage
25.Control over intracompany inventory transfers
26.Purchase orders prenumbered
27.Proper authorization for purchases
28.Review of open purchase orders
7Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Prepaid Expenses and Deferred Charges Yes No N/A Comments
1. Proper authorization to incur
2. Authorization and support of amortization
3. Detailed records4. Periodic review of amortization policy
5. Control over insurance policies
6. Periodic review of insurance needs
7. Control over premium refunds
8. Beneficiaries of company policies
9. Physical control of policies
Intangibles Controls Yes No N/A Comments
1. Authorization to incur
2. Detailed records
3. Authorization to amortize
4. Periodic review of amortization
8Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Fixed Assets Controls Yes No N/A Comments
1. Detailed property records
2. Periodic comparison with control accounts
3. Proper authorization for acquisitions
4. Written policies for acquisition
5. Control over expenditures for self-construction
6. Use of work orders
7. Individual asset identification plates
8. Written authorization for sale
9. Written authorization for retirement
10.Physical safeguard from theft
11.Control over fully depreciated assets
12.Written capitalization--expense policies
13.Responsibilities charged for asset anddepreciation records
14.Written, detailed depreciation records
15.Depreciation adjustments for sales andretirements
16.Control over intracompany transfers
17.Adequacy of insurance
18.Control over returnable containers
9Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Accounts Payable Controls Yes No N/A Comments
1. Designation of responsibility
2. Independence of A/P personnel from purchasing,cashier, receiving functions
3. Periodic comparison of detail and control
4. Control over purchase returns
5. Clerical accuracy of vendors invoices
6. Matching of purchase order, receiving report, andvendor invoice
7. Reconciliation of vendor statements with A/Pdetail
8. Control over debit memos
9. Control over advance payments
10.Review of unmatched receiving reports
11.Mutilation of supporting documents at payment12.Review of debit balances
13.Investigation of discounts not taken
Accrued Liabilities and Other ExpensesControls
Yes No N/A Comments
1. Proper authorization for expenditure andincurrence
2. Control over partial deliveries
3. Postage meter
4. Purchasing department5. Bids from vendors
6. Verification of invoices
7. Imprest cash account
8. Detailed records
9. Responsibility charged
10.Independence from G/L and cashier functions
11.Periodic comparison with budget
10Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Payroll Controls Yes No N/A Comments
1. Authorization to employ
2. Personnel data records
3. Tax records
4. Time clock
5. Supervisor review of time cards
6. Review of payroll calculations
7. Comparison of time cards to job sheets
8. Imprest payroll account
9. Responsibility for payroll records
10.Compliance with labor statutes
11.Distribution of payroll checks
12.Control over unclaimed wages
13.Profit sharing authorization
14.Responsibility for profit sharing computations
Long-Term Liabilities Controls Yes No N/A Comments
1. Authorization to incur
2. Executed in company name
3. Detailed records of long-term debt
4. Reports of independent transfer agent
5. Reports of independent registrar
6. Otherwise adequate records of creditors
7. Control over unissued instruments
8. Signers independent of each other
9. Adequacy of records of collateral
10.Periodic review of debt agreement compliance
11.Recordkeeping of detachable warrants
12.Recordkeeping of conversion features
11Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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TYPES OF INTERNAL CONTROLSChecklist Sorted by Functional Area
Shareholders Equity Controls Yes No N/A Comments
1. Use of registrar
2. Use of transfer agent
3. Adequacy of detailed records
4. Comparison of transfer agents report withrecords
5. Physical control over blank certificates
6. Physical control over treasury certificates
7. Authorization for transactions
8. Tax stamp compliance for canceled certificates
9. Independent dividend agent
10.Imprest dividend account
11.Periodic reconciliation of dividend account
12.Adequacy of stockholders ledger
13.Review of stock restrictions and provisions14.Valuation procedures for stock issuances
15.Other paid-in capital entries
16.Other retained earnings entries
12Source: Protiviti KnowledgeLeader http://www.knowledgeleader.com
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