Checklist for Evaluating Internal Controls
Checklist for Evaluating Internal Controls
Table of Contents
Budgets and Planning
1. Segregation of Duties
2. Procedural Controls

Cash
1. Segregation of Duties
2. Procedural Controls

Revenues and Receivables
1. Segregation of Duties
2. Procedural Controls
3. Billing and Remittance Verification

Capital Assets
1. Segregation of Duties
2. Procedural Controls

Procurement and Payables
1. Segregation of Duties
2. Procedural Controls

Payroll
1. Segregation of Duties
2. Procedural Controls

Electronic Data Processing
1. Segregation of Duties
2. Procedural Controls

Financial Reporting
1. Segregation of Duties
2. Procedural Controls

Checklist for Evaluating Internal Controls
Overview
Organizations, whether for profit or non-profit, assess the effectiveness of internal controls. The most efficient way to gather information and evidence about the internal controls of an entity is to conduct an interview with the managers using a checklist form of internal control questionnaire (Louwers, 2007). The preparer of the checklist should include questions about each significant assertion in order to obtain evidence about the control environment. Answers to the internal control questionnaire are in the form of yes or no; no usually indicates some weakness or control deficiency.

Policies and Procedures
A. Segregation of Duties Yes/No Comments
1. Does your organization have an organizational chart that defines lines of authority and responsibility? ________ ____________

2. Are current job descriptions on file for
Each employee in the firm? ________ ____________

B. Procedural Controls

1. Does your organization have an up-to
-date accounting policies and procedural manual? ________ ____________

2. Are personnel policies maintained and distributed to all personnel? ________ ____________

3. Does the governing board authorize all bank accounts and check signers annually? ________ ____________

4. Is the bank immediately notified of all the changes in authorized check signers? ________ ____________

Cash

A. Segregation of Duties Yes/No Comments
1. Are responsibilities for collection and deposit preparation functions adequately segregated from those for recording cash receipts and general ledger entries? ________ ____________

2. Are responsibilities for cash receipts functions adequately segregated from those for cash disbursements? ________ ____________ Are responsibilities for disbursement preparation and disbursement approval functions adequately segregated from those for recording or entering cash disbursements information on the general ledger? ________ ____________

3. Are responsibilities for the disbursement
Approval function adequately segregated from those for the disbursement, voucher preparation, and purchasing functions? ________ ____________

4. Are responsibilities for entries in the cash receipt and disbursement records adequately segregated from those for general ledger entries? ________ ____________

5. Are responsibilities for preparing and approving bank account reconciliations adequately segregated from those for other cash receipt or disbursement functions? ________ ____________

References

Louwers, T. et al. (2007). Auditing & assurance services: A look beneath the surface (2nd ed.).
New York: McGraw-Hill/Irwin.