Annex 2

of Financial Audit Manual

INTERNAL CONTROL EVALUATION SHEET

Internal Audit No:

Internal Audit:
Auditee’s Name:
Subject of Control:

Main Risk Factors Controls Needed Evaluation of Controls Identification of Test

Needed Methods References Control Evaluation
1 2 3 4 5 6

What risk exists? What control is to Initial Control evaluation What tests must be To documents in Following is to be included in this column:
eliminate the risk by Internal Auditor accomplished to identify working - description of existing situation,
identified? Internal Control efficiency? documentation of - evaluation,
an Internal - recommendations to improve the situation
Auditor

Internal Auditor’s Name and Surname: _____________________________________ Internal Auditor’s signature: ______________________________________
 Explanatory Comments on Annex 2
Internal Control Evaluation Sheet

st
1 Column – Main Risk Factors
For each subject of control potential risk factors shall be identified and measures indicated to reduce risk occurrence. Internal
Auditor’s role shall be to consider risk factors and identify processes that may prevent from achieving control objectives.
nd
2 Column – Controls Needed
At the beginning of Internal Audit action controls which are in place at auditee shall be identified by an Internal Auditor. Upon
knowledge on specialities of auditee’s control system, experience and knowledge acquired during training interventions for
auditors, appropriate measures to prevent from risks shall be identified by an Internal Auditor.
rd
3 Column – Evaluation of Controls Needed
nd
All of the measures identified in the 2 column shall be assessed by an Internal Auditor and a justified assessment shall be
rd
then filed in the 3 column. This is to help to identify the weakest points of the system and audit priorities. During the control
evaluation process Internal Auditor shall consider all possible conditions which may have impact on internal control
effectiveness. For clear determination of present level of control and to recognise all weaknesses of control system, flow chart
may be drawn by an Internal Auditor.
th
4 Column – Identification of Test Methods
When setting a control strategy various methods can be used by an Internal Auditor, such as: interviews, examination and
analysis of documents, procedures and mandatory documents, exploration, tests. Test method shall be chosen upon evaluation
of necessary controls and the method chosen should enable to identify:
- whether or not the existing controls are functional and are complied with
- control mechanisms in place, their applications and effectiveness
- actual or potential weaknesses of a control system
- system areas with highest level of risk.
th
The test methods chosen and procedure of their application should be clearly defined in 4 column. Should any interviews be
conducted, Internal Auditor shall select persons with whom interviews have to be conducted and what control mechanisms have
to be verified during interviews and any other information to be collected.
th
5 Column – References
References to original documents have to be made for the purpose of audit report and justification of recommendations made by
an Internal Auditor; therefor any of the information collected has to be documented thoroughly. Copies of the documents
collected during the audit action shall be filed by an Internal Auditor to his/her working documentation to ensure their availability,
if needed.
th
6 Column – Control Evaluation
Results of all reviews undertaken according to the test method chosen shall be included into the Internal Auditor’s working
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documentation with references to the control evaluation results. Record made in the 6 column shall contain detail information
on verifications completed, their results and main conclusions. Statement as to whether or not controls exist and are executed
shall be included into the conclusions as well as the reason for their inefficiency, if they have proved to be inefficient and
measures to be adopted to improve the situation. If an interview method has been chosen, conclusion shall be filed in the
Interview / Discussion Minutes (Annex 1 of the Manual).
If a control system is evaluated at more than one spots of an auditee, standard tests or internal control questionnaires may be
used by an Internal Auditor. If done so, such fact shall be recorded in an evaluation description but the test itself and forms
shall be filed in his/her working documentation. Relevant summaries which are also included into the working documentation
shall be developed by an Internal Auditor according to the test results and questionnaire data.