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Audit Program Area:

AUDIT PROCEDURES WP Ref

GENERAL ITEMS

1.  Obtain pertinent financial information:

a)    monthly financial reports

b)    quarterly financial reports

c)    chart of accounts listing

d)    fiscal year-end trial balance report

e)    Financial system quarterly reports

2.            Review pertinent financial information for any unique or unusual items
relating to the field.

3.            Review previous auditor reports and evaluate findings:

·         How often are audits on the field’s finances conducted?

·         When was the last audit performed?

·         By whom was the last audit performed?

·         Was the audit adequate?

·         Were past recommendations implemented? If not, what were the

reasons?

4.            Review the internal control questionnaire:

·         What are the field’s perceived internal control strengths?

·         Are there any weaknesses that require additional audit testing?

5.            Obtain a copy of the National Staff Personnel Policy Manual (if
available).

6 Obtain a copy of the Field Accounting Policy Manual (if available).

 CASH

Discuss and document with the field treasurer the procedures for the receiving
1 and disbursement of cash.

a) sources of cash (funds)

b)    frequency of deposits

c)    who makes the deposits

d)    the level of “cash” received

e)    the nature of documentation of expenditures (invoices, check requests,

agreements…)

f)     authorization procedures

2.            Determine whether the level of cash held in the field and in the office
is appropriate.

3 For petty cash funds

·         Is an accurate petty cash voucher maintained?

·         Are physical cash counts

a)    Conducted routinely by a person or people who are not direct custodians of
the petty cash funds?

b)    Reconciled with the petty cash voucher? Can all variances be explained?
c)    Documented by those people who performed the counts and reconcile
these counts against the petty cash voucher?

·         Is access to petty cash funds restricted? Who has access to these
funds?

4 For all field checking accounts

a) Determine the number of signatures required on each check.

b)    Determine the process by which cash is received for mission operations.

c)    Obtain bank statements for each bank account.

d)    Determine the frequency and timing of the preparation of bank

reconciliations. Who does the reconciliations?
 e)    Summarize a listing of deposits from the bank statements and reconcile the
amounts with reported home office transfers and other sources of income
reflected on the field’s financial reports.

f)     Obtain bank reconciliations and test for accuracy.

g)    Verify whether a second party reviews bank reconciliations monthly. These
examinations should be documented with a date of examination and a
signature of the second party.

AMOUNTS DUE FROM OTHERS (NOTES, ETC.)

Discuss with field treasurer the nature, purpose, and term of amounts due from
others. (There is an expectation that the mission complies with cash base
1 accounting standards).

2 Examine any note agreements.

3 If possible, verify balance with the other party.

Determine whether the interest is being properly computed and collected on a

4 timely basis.

Determine whether loans, advances, etc were properly authorized by CRC

5 personnel.

6.            Evaluate any personal account balances to determine reasonableness

and estimated timing of collection.

PROPERTY, EQUIPMENT, AND VEHICLES

1 Determine whether the field owns any assets.

(Automobiles, land, buildings, office equipment)

2 Determine whether a listing of all assets owned is maintained.

·         Obtain a copy
·         Review for completeness
·         Determine date of latest compilation
·         Verify whether the assets are registered to CRWRC. If not, state the
reasons.

3 Determine whether the field has obtained adequate insurance on these assets.

For any assets purchased, determine whether proper authorization was

4 received.
 For assets over $1,000.00, obtain copies of the invoices which adequately
5 document the purchase.

6.            Determine whether there is appropriate security over mission assets.

This includes documenting previous history of theft.

7 Evaluate computer system operations

·         Is there appropriate technical support?

·         What is the existing practice of updating virus protection?

·         How often do system back-ups occur?

ACCOUNTS PAYABLE

1.            Are there any payables booked? If so why? (There is an expectation

that the mission complies with cash base accounting standards.)

2 Has the Home Office been notified of any significant payables?

REVENUES

In connection with the review of deposits in the cash area, reconcile the
1 deposits to the receipts recorded on pertinent financial reports.

Independently confirm with the Home Office and other funding sources (the
amount and date of fund transfers). These amounts should reconcile to what
2 has been reported by the field.

Determine the nature of the various sources of receipts and any unusual
3 recording procedures, entries, etc.

EXPENDITURES

By review of the check register for the prior months, select checks and
1 review the following:

·         Cancelled checks for agreement of endorsement, payee, amount, etc.

·         Supporting invoice for agreement of description, amount, date, and
account classification.
·         Proper authorization in accordance with agency policy.

Review the check register for the prior months and be particularly alert for
2 unusual items such as
·         Large amounts
·         Payments to agency staff
 ·         Payments to field treasurer/director or related persons
·         Payments to banks
·         Payments to individuals
·         List any items noted above and follow up by discussing with the field
treasurer/director with the supporting documentation.

3 For travel advances, reimbursements, etc.

a)    Discuss procedures for reimbursement with the field treasurer/director

b)    Select disbursements for detail review of support and determine whether
the documentation includes the following:
1) Who incurred the expense?
2) What was the purpose of the expense?
3) When was the expense incurred?
4) Where was the expense incurred?
5) Why was the expense incurred?

Review personnel expenses for personal medical charges for expatriate level
staff. Agency funds should not be used unless with Home Office authorization.
4 This authorization must be documented.

OPERATING PROCEDURES

1 Review the mission's compliance with the host country's laws in regard to
·         Country registration

·         Payment of local taxes (payroll, property, income, etc.)

·         Employment contracts with national workers

·         Mission ownership of property (vehicles, land, and buildings)

2 Review the field's policy on housing.

·         How is the housing assigned?

·         How is the monthly rental allowance determined?

·         What housing expenses do the mission assume?

·         What housing expenses do the missionary assume?

·         Do any of the missionaries own their homes? If so, what type of
reimbursement is received from the mission? How is it determined?

·         Obtain a listing of the present monthly payments made for missionary
housing by the mission.
3 Field Vehicle Policies
·         How does the field determine if a vehicle is necessary for the work of the
missionary?

·         Do all missionaries on the field have a mission vehicle?

·         If some do not have a mission vehicle, why not?

·         What policy does the field have regarding the replacement of mission
vehicles?

·         How available, efficient, and costly is public transportation?

·         Is the mission's mileage policy being followed?

4 Budgeting and Planning Procedures

·         How does the budget evolve on the field?

·         Who is involved in the process?

·         How are the approved guidelines used in the process?

·         Has the field prepared contingency plans, should decreases be needed?

·         What difficulties are experienced in the formulation of the plans and
budgets?

·         Do field staff have any suggestions on how to make the procedure more
effective, efficient, and accurate?

·         How does the field determined the exchange rate used for the annual
budget if budgets are reported in local currency?

5 Currency Exchange Procedures

·         What laws do the host country have in regard to currency exchange?

·         Is the field's current practice in compliance with these laws?

·         What are the current practices of the missionaries for obtaining local
currency?

6 Children’s' Education Assistance

·         Obtain a listing of the tuition, fees, and boarding costs charged by each
of the approved schools.

·         What procedure is followed in determining which school is approved?

 ·         If boarding is needed, what are the choices? Include costs.

7 Travel policies and procedures

·         What procedure is used in the purchase of international air tickets?
Who purchases the tickets and where are they purchased?

·         Is a price check made with the Grand Rapids and/or Burlington office to
determine where the tickets could be purchased for the least amount?

·         How are personal international travel arrangements handled?

8 Medical & Dental Policies

·         Any positive/negative comments on the American or Canadian policies
currently being used?

·         What method is being used by the missionaries to forward their claims to
Cambridge or to the Canada office?

·         What medical costs are still being incurred by the mission? How are
these being accounted for?

9 Spouse Employment by the Mission

·         Did the field employ any of the missionary spouses? If so, what policies
govern the remuneration given?

Field Education &

10 Spiritual Retreat
·         Does the field have an education policy for its missionaries?

·         What policies govern the cost for the annual spiritual retreat? What is
considered mission expense and what is personal?

Cost-of-Living
11 Allowances
·         Does the field feel that ORC's current cost-of-living allowance accurately
reflects the economic conditions within the country?

·         If the field is currently conducting its own cost-of-living survey, when was
the last survey conducted?

National
Churches/Organi
zations
12 Relationships
 ·         Does the mission provide grants to any these? If so, what are the
amounts?

·         What procedures and controls are used to ensure the funds are used for
the intended purposes?

·         Are grant amounts properly recorded on field financial reports and in the
Financial system? PCD-funded projects must be recorded separately from
CRWRC-funded projects.

13 Benevolence Policy
·         Are mission funds used to address the benevolent needs of the
community that the missionaries may face each day? If so, is there a field
policy?

14.         Audit Planning

·         Are audits conducted routinely?

·         Does the field alternate in the type of auditors used?

·         Does the field coordinate with the Home Office in its audit planning?

15.         Consult with the field’s legal advisors (if any)

·       Taxation requirements

·       Sale agreements

·       The details of major contracts

·       The details of housing agreements

Auditor Evaluation

Field and Name of Evaluator

Auditor(s) Name

Date(s) of Field Testing

1.            Specify auditor type:

A) Local / Regional Auditor

B) International Auditor
C) In-field Volunteer
D) North American Volunteer
E) Home Office Auditor
F) Other
2.            How well did the auditor(s) and field staff communicate audit
expectations? Score from 1 (poorly) to 7 (excellent).

3.            Were the field’s supporting documentation handled with care by the
auditor(s)? Score from 1 (poorly) to 7 (excellent).

4.            Were interviews with field staff conducted in a professional manner?

Score from 1 (poorly) to 7 (excellent).

5.            Did the audit program used by the auditors adequately examine
sampled financial data? Score from 1 (poorly) to 7 (excellent).

6.            Did the auditor(s) communicate field audit status at routine intervals
during the course of the field audit? Score from 1 (poorly) to 7 (excellent).

7.            At the end of field testing, did the auditor(s) communicate auditor
recommendations in a clear and concise manner? Score 1 (poorly) to 7
(excellent).

8.            Do field staff find the audit recommendations helpful? Score 1

(poorly) to 7 (excellent).

9.            Were field staff able to give feedback on audit recommendations?

Score 1 (poorly) to 7 (excellent).

10.         Were field staff able to review a draft copy of the audit report before
the report was finalized? Score 1 (poor) to 7 (excellent).

11.         What were the overall strengths and weaknesses of the audit? Does
the field have suggestions that would improve the effectiveness of future
audits? Please write comments on a separate page.
Auditor Time Date Date Checked
Initials Spent Expected Finished Remarks By:
Purpose: To document key controls around the < >Cycle:

Location: Date:
Assertions

Presentation and Disclosure

Existence or Occurrence

Valuation or Allocation
Rights and obligations
Completeness

Accuracy

Cutoff
Control Objective: Risk: Action/Control Activity: Evaluation/Conclusion:
1

4
5
6
7
8
9
10
11
12
13

14
15
16
17
18
19
20
Purpose: To document key controls around the < >Cycle:

Location: Date:
Assertions

Presentation and Disclosure

Existence or Occurrence

Valuation or Allocation
Rights and obligations
Completeness

Accuracy

Cutoff
Control Objective: Risk: Action/Control Activity: Evaluation/Conclusion:
21

22
23
24

25
26
27

28
29
30
31
Introduction: The table below presents an example internal control review template with related control points that may be in
place within the respective control cycle. This is not intended to prescribe a “cookie-cutter” approach to internal control
reviews; instead it is intended to represent a number of control points, of which management should identify the most
significant in maintaining its control over business cycle information.

Significant control points identified during process mapping should be tested during an internal control review. Other, less
significant points should be included in the process flow narrative describing the Control cycle. An example narrative is
presented below, in the right-hand column. It is the management’s option to include the narrative below, or to present it as a
separate document (such as internal process overviews or agency-based procedures). For that reason, the example
narrative below is “grayed out.” If this template is utilized but alternative documentation describes the process in the internal
control program work papers, please feel free to remove the column.

The Control objectives below are broken down into the following sub-cycles: General/Control Environment, (list additional
cycles for the area under review).

For the purpose of this generic document, the following terms are used: Define terms for example in the area of fixed asset -
Assets that are capitalized and depreciated over a period longer than one year are referred to as “fixed assets,” or as “capital
assets”- the terms are used interchangeably; and the person responsible for managing fixed assets at the department level
is termed the “Property Control Coordinator,” with the understanding that at one branch, it may be Facilities Management,
while at another it may be an official from the Business Office. Management are encouraged to substitute below the terms
that are in widespread use among their staff.

Notes:

(1) Each broad area is divided into subcycles. A subcycle is a sequence of related processes for which one set of
objectives and risks can be determined. Audit Assertions are the implicit or explicit claims and representations made by the
management responsible for the preparation of financial statements regarding the appropriateness of the various elements
of financial statements and disclosures - See more at: http://accounting-simplified.com/audit/introduction/audit-assertions.
(2) Management must designate which of the control points that it deems to be significant or key, for testing as part of the
internal controls (IC) review. Only the significant control points are required to be tested.
(3) In addition to noting a weakness and means of remediation, the control in place and the test performed should also be
noted in this column. (This will help management enact and/or maintain the proper monitoring to identify control weaknesses
in the future.)
 POTENTIAL CONTROL
PROCESS AREA OBJECTIVES/ASSERTIONS (1)
POINT(S)(2)
Cash Receipts
Cash Disbursements
Procurement
Human Resources
Payroll
Accounts Receivable
Investments
Grants
Inventory
Financial Reporting
Fixed Assets
IT
RISK SUGGESTED CONTROL TEST
 IC REVIEW CONCLUSION (3)
/IDENTIFIED /WEAKNESSES/ACTION
TAKEN PROCESS NARRATIVE (SAMPLE WORDING)
Audit Program Area:

A fundamental element of internal control is the segregation of certain key duties. The basic idea
underlying segregation of duties is that no employee or group should be in a position both to
perpetrate and to conceal errors or fraud in the normal course of their duties. In general, the
principal incompatible duties to be segregated include:

- Custody of assets
- Authorization or approval of related transactions affecting those assets
- Recording or reporting of related transactions
- Execution of the transaction or transaction activity

An essential feature of segregation of duties/responsibilities within an organization is that no one

employee or group of employees has exclusive control over any transaction or group of
transactions.

Based on the above criteria, this worksheet has been designed to highlight conflicting duties
performed by one individual or group of individuals (potential lack of proper segregation of duties).
Audit teams are encouraged to use this form to help identify potentially commingled duties within
accounting processes that may constitute a control weakness.

Instructions

1) The Tester should inquire to determine which individuals are responsible for certain duties within
the company/location.

2) The matrix should be used to determine if there is potential for a segregation of duties conflict.
Use the following key to identify the potential financial risk and segregation of duties conflicts:

X - Segregation of duties conflict

H - High financial risk
M - Medium financial risk
L - Low financial risk

3) The potential issues should be investigated to ensure a mitigating control prevents the individuals
from performing both tasks.

4) If a control is not present, a conflict of duties may be present.

The concept of Segregation of Duties is to separate the major
responsibilities of authorizing transactions, custody of assets, recording of
transactions and reconciliation/verification of transactions for each business
process. From a separation of duties perspective, the completion of more
than one of these functions would be considered performing "incompatible
duties". In other words, no one employee should have responsibility to
complete two or more of these major responsibilities. However, staff
limitations may make this impractical and that is when Compensating
controls must be considered.

Instructions
We should always strive for the optimum degree of segregation of duties.
However, due to limited staff sizes at some organizations, optimum
separation of duties cannot be achieved. In those circumstances you
should at least strive for an acceptable(minimal) level of segregation of
duties which when combined with compensating controls will minimize the
impact of control deficiencies and exposure to errors or irregularities. A
minimal level of segregation of duties could possibly be achieved by
verifying that no one employee performs more than two of the "incompatible
duties". For example, an employee might perform the authorization and
verification/reconciliation functions but they should not record the
transaction or maintain custody of assets. A compensating control would be
managerial review.
 AP Voucher Entry

AP Payments

Vendor (add/delete/change)

Bank Reconciliation AP

Supplier Master Maintenance

Bank Reconciliation AR

AR Cash Application

AR Clear Customer Account

Task Group Description Grp 1 2 3 4 5 6 7 8

AP Voucher Entry 1
AP Payments 2
Vendor (add/delete/change) 3
Bank Reconciliation AP 4
Supplier Master Maintenance 5
Bank Reconciliation AR 6
AR Cash Application 7
AR Clear Customer Account 8
Item Master Maintenance 9
Service Master Maintenance 10
Purchase Requisitioning 11
Release Purchase Requisition 12
Process Purchase Requisition 13
Purchase Order Entry 14
Purchasing Agreements 15
Goods Receipt on PO 16
Service Receipts Entry 17
Physical Inventory 18
Inventory Adjustments 19
Sales Agreement/Contracts 20
Ship Product 21
Customer Master Maintenance 22
Customer Master (Credit) 23
Sales Invoicing 24
Sales Invoice Release 25
Sales Order Entry 26
Sales Order Release 27
Sales Pricing Maintenance 28
Sales Rebates 29
Open/Close General Ledger 30
Post Journal Entries 31
Approve Journal Entries 32
Reconciliation of Sub-Ledgers to
General Ledger 33
Initiate Wire Transfers 34
Approve Wire Transfers 35
Approve Asset Acquisitions 36
Record Fixed Assets into Fixed
Asset System 37
Fixed Asset Reconciliation 38
Employee Master File (add/delete) 39
Process Payroll 40
Issue Payroll Checks (Manual or
Electronic) 41
Payroll Bank Reconciliations 42
Maintain Security 43
Ship Product
21

Sales Agreement/Contracts
20

Inventory Adjustments
19

Physical Inventory
18

Service Receipts Entry

17

Goods Receipt on PO
Purchasing Agreements 16
15
Purchase Order Entry

14
Process Purchase Requisition

13
Release Purchase Requisition

12
Purchase Requisitioning

11
Service Master Maintenance

10
Item Master Maintenance

9
Initiate Wire Transfers
34

Reconciliation of Sub-Ledgers
33

to General Ledger
Approve Journal Entries
32

Post Journal Entries

31

Open/Close General Ledger

30

Sales Rebates
Sales Pricing Maintenance 29
28
Sales Order Release

27
Sales Order Entry

26
Sales Invoice Release

25
Sales Invoicing

24
Customer Master (Credit)

23
Customer Master Maintenance

22
Compensating Control
Maintain Security
43

Payroll Bank Reconciliations

Issue Payroll Checks (Manual 42
41
or Electronic)
Process Payroll

40
Employee Master File

39
(add/delete)
Fixed Asset Reconciliation

38
Record Fixed Assets into Fixed

37
Asset System
Approve Asset Acquisitions

36
Approve Wire Transfers

35
 Client Name
Internal Control Framework

Date Completed:
Completed By:
Reviewed By:

Question Yes No* Comments /Description

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
 To the best of my knowledge, the answers and comments noted above are accu
internal controls within this department:

Name and Title of Person Completing Form (please print) Name and Title of Department Dir

Signature of Person Completing Form Signature of Departmen

11/4/2021
Date Form Completed Date of Department Directo

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
 Employee Responsible for Task

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
s noted above are accurate and reflect the current
this department:

Name and Title of Department Director (please print)

Signature of Department Director

Date of Department Director's Signature

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
Control Risk Control Considerations
Assertion E,A,C,V,P Description of control Documentation W/P Ref.
Do controls meet objective?Test W/P Ref Testing exceptions noted? Yes/No
Resolution / remediation/ comments W/P Ref
Finding Ref # Control Testing Finding
Management Response & Treatment
Report Entity Recommendation
Action Plan/Management Response Person Responsible
Timeline Implemented
Notes