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KnowledgeLeader's Top 10: Q3 2018

Posted by Protiviti KnowledgeLeader on Thu, Oct 11, 2018 @ 09:54 AM

Each quarter, we like to take a look at the most popular tools and publications that we've published so that we can get a sense of what our readers enjoy most. This quarter's Top 10 list has variety--we see some classics, some surprises, and a lot of content that should be useful for completing your audit projects throughout 2018 and beyond. Check out the full list and enjoy!

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1. AR and Cash Application Process Flow

Cash application is a process relating to accounts receivable (AR), where incoming payments are applied to the corresponding customer invoice. Whether it is a cash or wire (EFT) payment, a monthly bank reconciliation is performed by the accounts payable (AP) assistant and the AR assistant within two days of month-end. It is then reviewed, signed off and filed by the financial controller. This process flow focuses on the AR and cash application process. 

 

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2. Internal Audit Risk Assessment Questionnaire

Internal audit performs a risk assessment to identify and prioritize key risks to best allocate the internal audit resources for the next year. This risk-based approach is focused on surveys/interviews of a cross-section of management personnel to solicit input from the potential customers of an internal audit function. 

The output from the surveys and interviews can be used to develop an audit plan that creates broad coverage through a blend of internal audits, control self-assessment and targeted external audit coverage. 

 

 

 

 

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3. Accounts Payable RCM

This document outlines risks and controls common to the “process accounts payable” process in a risk control matrix (RCM) format. 

Sample risks include: duplicate invoices are received and processed, leading to duplicate payment; goods are received for unauthorized or invalid purchase orders and are not appropriately recorded in the system; and misappropriations or fraudulent payments may be made.

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4. Internal Controls Checklist

This checklist sample provides a list of items to consider when assessing internal controls for common business processes.

It focuses on accounts receivable and sales controls, accounts payable controls, accrued liabilities and other expenses controls, cash disbursement controls, cash funds controls, cash receipts controls, general accounting controls, fixed-assets controls, intangibles controls, inventory and cost of sales controls, investments controls, long-term liabilities controls, notes receivable controls, payroll controls, prepaid expenses and deferred charges, and shareholders’ equity controls. 

 

 

 

 

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5. Control Self-Assessment Questionnaire: COSO

Self-assessment is a recognized best practice that has been applied to risks and controls for many years. Systematically applied across the organization at the entity and process levels, self-assessment is a pre-determined approach whereby individuals self-review or self-audit controls and communicate the results to appropriate management.

This questionnaire can be used to assess an organization's use of the COSO framework.

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6. Procurement Internal Controls Audit Work Program

This sample audit work program reviews the internal controls in an organization’s procurement process.

Sample questions to consider include: Are purchase orders based on authorized requisitions? Are purchase orders properly coded to identify the cost objective (direct, indirect or inventory)? Are purchase orders serially controlled and accounted for? Is the use of standardized purchase orders required? Are effective numerical document controls or status reports maintained to record the receipt of purchase requisitions? Does the purchasing department maintain specifications for all materials and services used by the contractor? Are requirements combined where appropriate? 

 

 

 

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7. The Updated COSO Internal Control Framework: Frequently Asked Questions

In May of 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released its long-awaited updated Internal Control – Integrated Framework (New Framework). The New Framework is an important development; it facilitates efforts by organizations to develop cost-effective systems of internal control and supports organizations as they adapt to the increasing complexity of a changing business environment.

Companies should familiarize themselves with the New Framework, determine their transition plan, and communicate to stakeholders the release of the New Framework and its implications to the organization. In this booklet, we address various questions regarding the New Framework from COSO, including the reasons why it was updated, what has changed, the process for transitioning to its use, and steps companies should take.

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8. Inventory Policy

This policy outlines guidelines and accounting policies to ensure that inventory is properly controlled and costed, and losses or shortages are prevented. It applies to all inventory items, including raw materials/parts, work in progress, and finished goods and consigned inventory. The procedures focus on inventory valuation, slow moving and excess inventory/reserves, reconciliation of perpetual inventory, physical inventory, consigned inventory, scrap, intercompany transfers, and capitalized cost.

In this sample, inventories are stated at the lower of cost or market. The valuation method for each item of inventory shall remain consistent from one accounting period to the next accounting period.

 

 

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9. Internal Audit Planning Memorandum

This memo captures all details for planning an internal audit, such as the internal audit team members’ names and roles, duration of the internal audit, location of the internal audit, company business hours, key contacts, internal audit scope and approach, deliverables, high-level work program, and high-level work schedule.

This memorandum should be completed as part of the initial audit planning process and is meant to enhance audit efficiency.

 

 

 

 

 

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10. Strategic Internal Audit Plan

This sample outlines the approach employed by internal audit to develop the audit plan and indicative projects for the year.

The plan is based on the previous strategic internal audit plan and has been updated to reflect changes within the organization. The approach to develop the revised plan includes three steps: develop internal audit plan; confirm internal audit focus area; and executive and audit committee endorsement. Develop internal audit plan included the following steps: hold discussions with executives, directors and board members where high-level risks and potential areas of internal audit focus were identified; and conduct risk workshop(s) to confirm areas of focus.

 

Topics: KL Top Ten, KnowledgeLeader tools

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