REVIEW AND RELIANCE ON INTERNAL CONTROL BY THE AUDITOR

Presented by: Syed Faraz Mehdi

MBA-IV Karachi University

Review the system of internal control before starting the Audit

1) Examine the weaknesses of system, If any

2) Consider the proposition of introducing test check to be performed in audit.

Based upon above (1) & (2), determine exactly the extent of work to be performed to enable the auditor to express his opinion.

Review and Reliance on Internal Control

Why Review?

To form an opinion , effectiveness of the system should be tested .

This also confirms that whatever existed on the paper did exist in practical aspect also.

Review and Reliance on Internal Control

Other Advantages

•Saving of time

•Reduction of Cost

•Assurance & Reliability of the Financial Accounts

Review and Reliance on Internal Control

The Review Procedure Involves

• Either Oral Questioning

• Or Use of written questionnaire

For the Audit of each aspect of businessIt is also advisable that Auditor should obtain a written statement of details of Internal Control.

Review and Reliance on Internal Control

Reliance on Internal Control System

• Existence of good Internal Control System reduces the work of the Auditor but, • does not reduce his Liability

• So the efficiency of the Audit depends on • Skill, • Tact,• Experience and • The Judgment of the Auditor.

Review and Reliance on Internal Control