Auditor’s Duty in Evaluating the System of Internal Control

Auditor’s Duty in Evaluating the System of Internal Control

1. Understand the System: The auditor should understand the control system by discussing with personnel at various levels in the organisation. He should also refer to organisation charts and manuals for this purpose.

2. Determining the Reliability: The management installs and maintains an adequate internal control system taking into account the nature and size of the business. It is the duty of an auditor to establish a basis or degree of reliance on the system of control.

3. Determining the Adequacy: The auditor should apply various compliance tests in order to determine the adequacy of internal control system.

4. Review and Evaluation: Auditor should critically review and evaluate the internal control system to determine the efficiency of its operations. If there is a good system of internal control the work of an auditor becomes easy.