So far as the auditor is concerned, the examination and evaluation of the internal control system is an indispensable part of the overall audit programme. What are the key areas that auditor will enable to know after reviewing internal controls.

Auditing and Assurance Revision Questions and Answers

The review of internal controls will enable the auditor to know:
i) Whether errors and frauds are likely to be located in the ordinary course of operations of the business.
ii) Whether an adequate internal control system is in use and operating as planned by the management.
iii) Whether an effective internal auditing department is operating.
iv) Whether the controls adequately safeguards the assets.

v) How far and the how adequately the management is discharging its function in so far as correct recording of transactions is concerned.
vi) How reliable the reports, records and the certificates to the management can be.
vii) The extent and the depth of the examination that he needs to carry out in the different areas of auditing.
viii) What would be appropriate audit technique and audit procedure in the given circumstances.
ix) What are the areas where control is weak and where it is excessive.
x) Whether some worthwhile suggestions can be given to improve the control system.

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