An internal control questionnaire is a document which an auditor provides to employees of a company before performing an audit. The questionnaire is useful to determine which areas the audit should focus on. When employees answer the questions, the auditor knows whether the company is keeping accurate records overall, and has evidence that shows who is responsible for which documents. The company receives the benefits of having a cheaper, faster and more effective audit because of the internal control questionnaire.
An internal control questionnaire provides evidence that a document or financial database exists, For example, a questionnaire may ask whether the company keeps a chart of its accounts. The auditor can then ask where the chart of accounts is located if it exists, or design the audit to operate without it. If an employee mentions that the chart of accounts exists and does not know where it is located, that may provide evidence that the company does not keep good records so the auditor should perform a more thorough audit.
Internal control questionnaires provide evidence that the auditor uses to determine if employees check the work of other employees. The Arizona Department of Health Services questionnaire asks whether the accountants at an agency take annual vacations. Requiring accountants at an organization to take time off from their jobs strengthens internal controls because other accountants who work for the organization can check the accuracy of the books while the main record keepers are away.
Board of Directors Controls
An internal control questionnaire examines the effectiveness of a board of directors. The internal questionnaire asks questions such as whether the directors of the organization monitor accounts receivable records, or whether the directors receive financial reports from the organization and examine them. The internal control questionnaire shows the auditor whether the board of directors takes an active role in ensuring that financial records are accurate.
Auditors can define general areas of concern when creating an internal control questionnaire, so it can be used when auditing other departments or companies. For example, an auditor can create a document that assigns high risk to inventory records when a company controls valuable inventory which is not monitored frequently, or low risk when the inventory is not valuable or specialized. Other auditors can take the standard document and reuse it when performing audits in the future. The Washington State Office of Financial Management includes explanations in its sample questionnaire which explain why each internal control is important for employees who do not have audit training.
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