The following methods may be used to record the client’s system:
|1. Narrative system notes· A simple convenient way of recording a system
· The quickest approach in a small unsophisticated system
· Disadvantages are
(a) cumbersome in a large system
(b) difficult to interpret and review
(c) difficult to alter if the system changes and
(d) easy to miss “loose ends” or even to miss out whole sections of the system
2. Organization charts
3. Internal Control Questionnaires
· A pre-printed document used widely in practice to ascertain the controls in a client’s system
· Helps to ensure a formal approach to systems recording
· Auditor’s attention should be drawn to the need for controls in the system
· Easy to cross reference to other working paper
(a) may be used improperly as the auditor may waste time asking unnecessary questions using a standard ICQ.
(b) may encourage auditors to perform work in a mechanical fashion without considering the circumstances of a particular client.
Diagrammatic representation of the system
· May be used to highlight the existence of controls and the division of responsibilities.
· Should show the complete system without leaving an incomplete record of document movements
· Disadvantages: danger is that they might not be fully understood by the auditor and so are misinterpreted.