Question

Internal controls are evaluated using both a flowchart and a questionnaire. Discuss the relative advantages and disadvantages of using each type of control documentation.

Answer 1

Accounting

Internal controls are evaluated using both a flowchart and a questionnaire. Both of them have there relevance to evaluate internal control on different criteria and aspects.

Flowchart

It is a type of diagramatic representation on a workflow or process. It represented by Processing steps through boxes and Decisions through diamonds.

Advantages

1. Easy to understand workflow

2. Easy to implement

3. Provide bird eye view internal control

4. Easy to communicate

Disadvantages

1. Complex program hard to draw and understand

2. Hard to modify , cause it will changes each and every branch and loops

3. Time consuming

Questionnaire

It is a checklist used as the primary tool for performing audit to assess internal control environment. ... Based on the results of it, the performance of additional, more comprehensive procedures may be performed

Advantages

1.Less probability to forget important area

2. Answer is either " YES" ( effective controls) or "NO" ( defines weakness or deficiency in controls

Disadvantages

1. It is inflexible

2. Less reliable

3. Misinterpretation of question leads audit risk