Question

The audit schedule E 11 indicates that the client's internal control related to purchase transactions includes both manual and automated components (see control type section). Describe the difference between manual and automated controls. Review the flowcharts on audit schedule E10-1 and E10-2, what are the manual controls and automated controls in T&CH's Purchase Ordering and Receiving?

Answer 1

Internal Controls are important to ensure the company operates without any loopholes and any material misstaments comes in the eyes of the management.

The manual controls are generally the checks that are perfomed by the internal control team at regular intervals to check the accuracy of the transactions whereas the autonated controls are placed in the system to detect any errors in the system of the company. These controls needs to be reviewed at year end and the results are interpreted to understand the errors or issues involved.

In the PO system the manual controls are that all the PO's are being approved by the manager before going to the supplier and has a copy of quotation attached to them, whereas an autoanted control is that a PO is only exhaused if all the items are received for the PO and the Goods receipt note are prepated for that.