Giant Ltd. is newly established cement industry and yet to start commercial production. Various payments, large and small, are being regularly made. You are required to prepare internal control questionnaire regarding „procedure for authorization‟ for payments.?

Answer
The internal control questionnaire for „procedure for authorization‟ may be drawn as below:
i) Does the enterprise have a formal document showing the various authorities, which can sanction payments along with the nature of the relevant payments and the limit on sanctioning powers?
ii) Does the system provide for authorization for certain payments by the top management or the governing body?
iii) Are the financial powers of various sanctioning/disbursing authorities reasonable?
iv) Have the financial powers of various authorities been intimated to various departments of the enterprise?
v) Is there a system of post facto authorization of payments in exceptional cases where prior sanction could not be obtained?