Page 71 - CA Inter Audit PARAM

CA Ravi Taori
If on a perusal of the answers, inconsistencies or apparent incongruities are noticed, the matter
is further discussed by auditor’s staff with the client’s employees for a clear picture. The
concerned auditor then prepares a report of deficiencies and recommendations for
improvement.

QNO-- Internal Questionnaire on Insurance Cover of Company New Course – (M24M)
ICS.17.50 Bhaskar CNO –Unique

Internal Control Questionnaire is a comprehensive series of questions concerning internal control. A company
is engaged in business of manufacturing of chemicals. It has two plant locations in city “A” and one plant
location in city “B” involving huge value of assets. Building at three locations is owned by the company. The

company earns handsome profits and does not want to suffer losses due to business interruptions. It has a
dedicated department for looking after insurance matters. As an auditor, prepare an internal control
questionnaire concerning this department for obtaining staff responses.
Answer Internal Control Questionnaire
• Are competitive quotes obtained from different insurers?
• Is comprehensive insurance cover obtained for fire, flood, burglary, earthquake risks etc.?
• Are all three locations in city A and B covered?
• Are all assets consisting of building, plant & machinery and inventories covered?
• Is there an adequate procedure to ensure that assets acquired between two renewal dates are also
covered by insurance?
• Is there an official who decides on value for which policies are taken?
• Does officer who decides on policy value review periodically adequacy of insurance cover?
• Is loss-of-profits insurance cover taken?
• Have there been any instances of rejection of claims?
• Are pending claims followed-up with insurers? 3

QNO Check List Old Course -- (M16R)
ICS.21 Bhaskar CNO- SA315-P2.280
What is check list? Give few examples of check list instruction.

Answer ➢ Check List
This is a series of instructions and/or questions which a member of the auditing staff must
follow and/or answer
When he completes instruction, he initials the space against the instruction.
Answers to the check list instructions are usually Yes, No or Not Applicable. This is again an
on-the-job requirement and instructions are framed having regard to the desirable elements
of control.
➢ A few examples of check list instructions are given hereunder:
Are tenders called before placing orders?
Are the purchases made on the basis of a written order?
Is the purchase order form standardised?
Are purchase order forms pre-numbered?
Are the stock control accounts maintained by persons who have nothing to do with:
• custody of work;
• receipt of stock;
• inspection of stock; and
• Purchase of stock?
The complete check list is studied by the Principal/Manager/Senior to ascertain existence of internal
control and evaluate its implementation and efficiency.

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