Internal Control Questionnaires (ICQs)

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ICQs provide system for the assessment of risks embedded in the internal control system. Every internal auditor prepares ICQs according to his understanding of the internal control system. There are some certain common areas that are present in every organization. This ICQs deal with those common areas that are integral part of every organization's internal control system.

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Internal Control Questionnaires (ICQs)

  1. 1. 1.1 Risk Assessment Procedures XYZ Co., Dubai, United Arab Emirates.INTERNAL CONTROL QUESTIONNAIRES Internal Control Questionnaires provide bases for risk assessment which is considered to be the essential part of internal audit framework. This booklet provides internal control questionnaires for a range of topics from operations to finance. Also includes risk assessment programs for information systems.
  2. 2. XYZ Co., Dubai [Internal Control Questionnaires] To my respectable teachers. 2
  3. 3. XYZ Co., Dubai [Internal Control Questionnaires]Contents1 Mission ............................................................................................................................................ 52 Planning .......................................................................................................................................... 53 Control Environment ..................................................................................................................... 64 Monitoring Overall Performance ................................................................................................. 85 Effectiveness of Processes.......................................................................................................... 96 Efficiency of Processes .............................................................................................................. 107 Allocation of Resources.............................................................................................................. 108 Use of Resources ........................................................................................................................ 119 Operating Environment: Compliance with Laws & Regulations........................................... 1110 Operating Environment: Compatibility with External Environment ...................................... 1211 Budgetary Controls & Follow up Reviews ............................................................................... 1512 Cash & Cheque Receipts........................................................................................................... 1713 Payments ...................................................................................................................................... 2314 Cash on Hand & in Banks .......................................................................................................... 2415 Deposits to Company Treasury ................................................................................................ 2516 Cash Funds .................................................................................................................................. 2517 Investments .................................................................................................................................. 2618 Revenue Enhancement, Market Trends & Updates .............................................................. 2919 Cost Recovery: Allocation & Apportionment ......................................................................... 3020 Billing to Customers .................................................................................................................... 3021 Accounts Receivables ................................................................................................................ 3222 Inventory: Goods, Materials & Stores ...................................................................................... 3523 Operating Fixed Assets .............................................................................................................. 3824 Purchasing & Payables .............................................................................................................. 4225 Payroll ........................................................................................................................................... 4526 Human Resources Planning, Control & Management........................................................... 4927 Financial Planning, Accounting & Reporting ........................................................................... 5428 Services (include both to and by the XYZ Co.)....................................................................... 6129 Information System: Management & Controls ........................................................................ 65 3
  4. 4. XYZ Co., Dubai [Internal Control Questionnaires] Section IBusiness Planning, Management & Control Environment [Covered in Table 1-10] 4
  5. 5. XYZ Co., Dubai [Internal Control Questionnaires]1 Mission No. Description Ref. Y/N N/A 1.1 Has the organization adopted a mission statement? 1.2 Is the mission stated clearly, concisely and in easily understood terms? 1.3 Is the mission compatible with the mission of the parent company? Is the mission consistent with laws, regulations, and the Company Law 1.4 enforceable in UAE? Is the mission statement divulged and displayed conspicuously 1.5 throughout the organization? 1.6 Has management set operational goals for the organization? 1.7 Are these operational goals congruent with each other? 1.8 Do these operational goals directly support the mission? 1.9 Are these operational goals stated in measurable terms?1.10 Are the goals further divided into sub-goals for operating units? Is a method used to help employees understand how their daily work1.11 contributes to the goals of their departments and to the mission of the organization?2 Planning No. Description Ref. Y/N N/A 2.1 Has the management developed plans to achieve stated goals? 5
  6. 6. XYZ Co., Dubai [Internal Control Questionnaires] Do these plans describe clearly objectives to be achieved, the methods 2.2 to be used, how resources are organized and time line for completion? 2.3 Do these plans include financial budgets? Does the planning process include input from knowledgeable operating 2.4 personnel? Are these plans communicated to personnel responsible for 2.5 implementing them? Are the plans converted into specific tasks that are assigned to specific 2.6 employees?3 Control Environment No. Description Ref. Y/N N/A  Integrity & Ethical Values Are there written policies and internal operating procedures that have 3.1 been approved by the governing body or top management? Does the companyhave a code of ethical conduct that has been made 3.2 available to all employees? Have transactions been executed in accordance with integrity and 3.3 ethical values/codes? Are procedures documented, kept current and readily available for use 3.4 by all employees?  Commitment to Competence& Excellence 3.5 Are responsibilities clearly defined in writing and communicated? Does the management understand knowledge and skills required to 3.6 accomplish tasks? 3.7 Does the management get involved in training? 6
  7. 7. XYZ Co., Dubai [Internal Control Questionnaires]  Management’s Philosophy & Operating Style Does the management use budget, spending plans, etc. to review the3.8 company’s performance? Are accounting records and accounting personnel at all locations/sites3.9 under the supervision of the Accounting Manager/Financial Controller? Does the management actively follow-up on complaints from3.10 customers/clients?3.11 Are policies and procedures consistent with statutory authority?3.12 Are the budget system and the planning process integrated? Are periodic (monthly, quarterly) reports on the status of actual to3.13 budget performance prepared and reviewed by top management?3.14 Are unusual variances between budget and actual examined? Are operations made in accordance with statutes governing the3.15 company? Is the internal control structure supervised and reviewed by3.16 management to determine if it is operating as intended? Does the company compare its actual performance with its goals and3.17 objectives on periodic basis? Does the companyhave a functioning internal audit staff to review its3.18 operations? Does the internal audit staff report to an official independent of the3.19 operations under review?  Organizational Structure Are there written policies and procedures for all major areas3.20 of the organization?3.21 Are procedures reviewed annually for possible updating? 7
  8. 8. XYZ Co., Dubai [Internal Control Questionnaires] Is there an organization chart clearly defining the lines ofthe 3.22 management authority and responsibility? 3.23 Is the organization chart current and accurate? 3.24 Does the organization chart enhance work performance? 3.25 Are all the company’s operations centralized ordecentralized? 3.26 If decentralized, is monitoring of the areas adequate?  Assignment of Authority & Responsibility Has the management provided resources to ensure compliance with the 3.27 requirements of the UAE Laws? 3.28 Are there sufficient training opportunities to improve competency and update employees on new policies and procedures available? 3.29 If known areas of knowledge are limited, has help been enlisted from peers, auditors or outside consultants to identify alternatives and suggest solutions? 3.30 Have the managers been provided with clear goals and direction from the governing body or top management? Are responsibilities divided so that no single employee controls all 3.31 phases of a transaction?4 Monitoring Overall Performance No. Description Ref. Y/N N/A Does the management assess progress toward goal achievement 4.1 periodically? Does this periodic assessment include comparison of actual financial 4.2 data to budgets and explanation of variances? 4.3 Is this assessment based on reliable and objective measurements? 8
  9. 9. XYZ Co., Dubai [Internal Control Questionnaires] Is this assessment done timely and at a frequency that allows timely 4.4 adjustments? Are the results of the progress assessment shared with the 4.5 personnelresponsible for action? Are the responsible personnel requested to take action to modify the 4.6 goals or adjust the plans and processes? Does the management follow up to ensure that the appropriate action 4.7 was taken? Does an independent body monitor the operations of the organization 4.8 on an ongoing basis? Has the organization undergone an independent review or audit in the 4.9 past five years?5 Effectiveness of Processes No. Description Ref. Y/N N/A 5.1 Has the management identified the core processes that are used to carry out the mission of the organization? 5.2 Has the management defined the effectiveness of these processes? 5.3 Does the management have a system in place to measure this effectiveness? 5.4 Are performance measures for each process obtained timely and at a frequency that permits timely adjustments? 5.5 Is appropriate action taken as a result of the measurements to improve effectiveness? 5.6 Are core processes properly documented to facilitate changes? 5.7 Is the documentation kept up-to-date? 9
  10. 10. XYZ Co., Dubai [Internal Control Questionnaires]6 Efficiency of Processes No. Description Ref. Y/N N/A  Performance Evaluation & Appreciation Has the management defined efficiency in terms of performance and 6.1 achievement of goals? 6.2 Does the management have a system in place to measure efficiency? Are efficiency measurements compared with industry standards or 6.3 otherbenchmarks? Are efficiency measurements obtained timely and at a frequency 6.4 thatpermits timely adjustments? Is appropriate action taken as a result of the measurements to 6.5 increaseefficiency?7 Allocation of Resources No. Description Ref. Y/N N/A Are total available resources identified and assigned to projects or 7.1 construction sites? 7.2 Are under-utilized resources identified for re-deployment? 7.3 Are goals prioritized for purpose of resource allocation? Is a consistent method used to allocate resources to achieve an optimum balance between effectiveness and efficiency? (To maximize 7.4 effectiveness as many resources as possible may be allocated to a goal; to maximize efficiency as few resources as possible should be used). 10
  11. 11. XYZ Co., Dubai [Internal Control Questionnaires]8 Use of Resources No. Description Ref. Y/N N/A Are there current job descriptions for key personnel which state clearly 8.1 the expected contribution to the organizational goals? Are instructions available on how to use the non-personnel resources 8.2 such as equipment, information systems and available funds? 8.3 Is the contribution of each key resource to organizational goals defined? Is appropriate action taken to improve performance that falls below 8.4 expected levels? Is there appropriate recognition to reinforce contributions at or above 8.5 expected levels? Is there an adequate training program for personnel to maintain essential 8.6 skills and abilities? Is there an incentive program for personnel to develop other job-related 8.7 skills and abilities? Are major equipment items subjected to a regular maintenance/ test 8.8 schedule to ensure acceptable output level? Are information systems evaluated periodically for continued 8.9 usefulness?9 Operating Environment: Compliance with Laws & Regulations No. Description Ref. Y/N N/A Are current laws, regulations and standards that significantly affect 9.1 operations identified? Is a method used to identify all laws, regulations and standards affecting 9.2 the organization? Is a mechanism used to monitor compliance with these laws, regulations 9.3 and standards? 11
  12. 12. XYZ Co., Dubai [Internal Control Questionnaires]10 Operating Environment: Compatibility with External Environment Description Ref. Y/N N/A  Change Management Are all external factors that can have a material effect on operations in 10.1 the future identified (Trends in industry, economy, technology, demography, regulations)? Are the future effects of these external factors evaluated and planned 10.2 for? Is there a formal and written Change Management process whereby 10.3 system changes are requested, approved, documented and approved for installation? 12
  13. 13. XYZ Co., Dubai [Internal Control Questionnaires] Section I: Summary of ResultsResponding Person:Name: ____________________________________________________________Designation: _______________________________________________________ Summary of Results1: __________________________________________________________________________________________________________________________________________2: __________________________________________________________________________________________________________________________________________________3: __________________________________________________________________________________________________________________________________________________4: __________________________________________________________________________________________________________________________________________________5: __________________________________________________________________________________________________________________________________________________6: __________________________________________________________________________________________________________________________________________________I certify that the foregoing responses are accurate to the best of myknowledge, understanding and comprehension taken from the companymanagement.Completed by: ______________________________ Date: __________________Reviewed by: _______________________________ Date: __________________ 13
  14. 14. XYZ Co., Dubai [Internal Control Questionnaires] Section IIDesign of Internal Controls System [Covered in Table 11-25] 14
  15. 15. XYZ Co., Dubai [Internal Control Questionnaires]11 Budgetary Controls & Follow up Reviews No. Description Ref. Y/N N/A  Budgeting Preliminaries Is a budget developed for all funds that require an approved budget by 11.1 law or by Board policy? Is there a formal organizational chart defining responsibilities for 11.2 preparing, approving, changing and submitting the budget to the Office of Budget Management? Are budgetary increases or decreases (as they relate to Programs or Contracts or Sub-contracts), that are mandated by the management 11.3 communicated to operating departments? Is this done in a timely manner? Are initial budget submission developed and prepared by major 11.4 departments and activity centers? Are budget revisions approved by an authorized person before being 11.5 entered into the accounting system? Are the managements goals and objectives integrated into budget 11.6 submissions? Are expenditure and revenue transactions reviewed to determine that 11.7 coding is consistent with budget classifications? Are budget reports distributed, (or available on-line), to operating 11.8 departments as a management tool?  Segregation of Duties Are the following duties generally performed by different people: Preparation and approval of the budget submitted to the management? 11.9 Implementation and approval of the budget submitted to the management, including budget revisions? Recording budget revisions in the General Ledger and the approval or implementation functions? 15
  16. 16. XYZ Co., Dubai [Internal Control Questionnaires]  Preparation & Approval Are budgets prepared in sufficient detail (i.e. at operational11.10 responsibility level) to provide a meaningful tool to monitor subsequent performance?11.11 Are instructions from the company Budget Office followed? Are budget estimates based on prior actual results and reasonable11.12 forecast of future events? Are budget estimates supported by detailed worksheets that show how11.13 the estimates were calculated and the assumptions made? Is the budget preparation assigned to a competentand experienced11.14 staff? Does the department head review the estimates and worksheets before11.15 submission? Are the budgets reviewed and approved by the Board on annual11.16 basis? Are the budgets flexed according to the activity levels achieved on11.17 periodic basis?11.18 Are there any rolling over of monthly or quarterly budgets? Are the funds used only for the budgeted purchase of goods or11.19 services that support the annual budgets? Is there a procedure to ensure that there are sufficient budgeted funds11.20 to cover major expenditures before they are incurred?  Monitoring of Budgets Are there any follow up reviews in place of monthly and annual11.21 budgets flexed to the activity levels achieved? Are over expenditures or under realized revenues discussed with11.22 departmental personnel and are there explanations for significant variation from budgeted amounts?11.23 Is there a procedure to follow up on major unrealized revenue items? 16
  17. 17. XYZ Co., Dubai [Internal Control Questionnaires] Does the management review actual results against the monthly 11.24 budgets? Does the management initiate prompt action to correct anticipated 11.25 budget variances? Are all significant projected budget variances explained in the follow 11.26 up review reports? Are revised budget estimates submitted to the Board promptly for 11.27 action? Does the management compare budget estimates with actual results at 11.28 year end to identify errors or changes in trends? Does the management take prompt action to address budget 11.29 variances? Are significant budget variances and corrective action reported timely 11.30 to the Chief Financial Officer or the Board for appropriate action? Are performance data collected to evaluate the effect of allocation of 11.31 resources? Are budgeted resources and performance data appropriately 11.32 summarized on the Annual Report to the Board?12 Cash & ChequeReceipts No. Description Ref. Y/N N/A  System Are the following duties distributed among at least two individuals: Authorize cash receipts? 12.1 Record cash receipts? Deposit cash receipts? Reconcile cash receipts? Are there guidelines for accepting remittances that do not agree to 12.2 amountsowed to the company? 17
  18. 18. XYZ Co., Dubai [Internal Control Questionnaires] Is there a formal organizational chart defining responsibilities for12.3 processing and recording cash transactions?12.4 Are cheques identified by maker and amount on the deposit slip? Are there procedures in place to establish a proper cut-off of cash12.5 receipts at the end of the fiscal year?12.6 Is a mail receipts log maintained for mail receipts? Is the mail receipts log reconciled to:12.7 The cash receipts journal? Validation certification of deposit/deposit slips? If payments are made in person (seminars, workshops, etc.), are12.8 receipts for payment used and accounted for and balanced to deposits? Do control procedures exist regarding the collection, timely deposit,12.9 and recording of collections in the accounting records at each collection location? Are pre-numbered receipts issued for all cash collections and are12.10 numbers of all receipts accounted for?12.11 Are logs of receipt book issuances maintained?  Petty Cash Management12.12 Are petty cash/change funds at the minimum effective amount?12.13 Are all petty cash funds maintained on an imprest basis? Are unauthorized advances from petty cash funds to employees12.14 prohibited?12.15 Are all petty cash cheques cashed promptly at the banks? 18
  19. 19. XYZ Co., Dubai [Internal Control Questionnaires] Are petty cash vouchers or bills required for all petty cash disbursements and are they pre-numbered? Are they signed by persons receiving cash?12.16 Are they approved in writing by department head or other responsible official? Are they properly supported by vendor receipts? Are they type-written or written in ink to preclude alterations? Is petty cash kept in a locked place, where only the custodian has12.17 access?12.18 Are petty cash funds segregated from other cash? Are letters accompanying gifts, grants, donations, etc., retained as part12.19 of the permanent records?12.20 Are the authorization records of the depository banks up to date?12.21 Are receipts deposited as often as required by the company policy?  Segregation of Duties Are the following duties generally performed by different people: Custodian of the fund, reconciliation of the fund and access to cash receipts? Filling out the disbursement receipts, disbursement, and reconciliation? Making a deposit, billing, making General Ledger entries and collecting?12.22 Collecting cash, placing a restrictive endorsement on the Cheques, balancing cash, closing cash registers, making a deposit, maintaining Accounts Receivable records and making General Ledger entries? Collecting of licenses, fines, and inspections and making General Ledger entries? Collecting cash and reconciling the bank account? Closing Cash Registers daily by a person not involved in cash collection? 19
  20. 20. XYZ Co., Dubai [Internal Control Questionnaires]  Security12.23 Is there adequate physical security surrounding cashiering areas? Are employees prohibited from cashing personal Cheques at12.24 cashiering areas?12.25 Is cash receiving centralized to the maximum extent possible?12.26 Are all employees handling cash receipts adequately bonded?12.27 Are "audit tapes" retained for cash registers? Is a restrictive endorsement placed on incoming cheques as soon as12.28 received? Are petty cash vouchers effectively canceled at the time of12.29 reimbursement to the fund by an individual other than the custodian? Is a system of pre-numbered receipts with adequately controlled12.30 copies in use wherever practicable?12.31 Are cash receipts controlled at the earliest point of receipt? When funds cannot be deposited daily, are the funds transported to a12.32 centralized location at the end of the workday and secured overnight? Are unidentified cash remittances immediately returned to the payers12.33 or deposited into a suspense account for further research? Is supporting documentation required to indicate the purpose of the12.34 remittance to the company?  Receipts through Cheques12.35 Is cashing of personal cheques against collections prohibited? Are the cheques recorded immediately upon receipt in the Bank12.36 Book?12.37 Are currency and cheques accounted for separately? Are cheques reviewed for accuracy and authenticity before12.38 acceptance? 20
  21. 21. XYZ Co., Dubai [Internal Control Questionnaires] Are cheques that show suspicious alterations immediately returned to12.39 payers?12.40 Is a Board-approved fee charged for all returned cheques? Are all cheques promptly restrictively endorsed “for deposit only” to12.41 the company upon receipt?  Cash Collections Are cash collections recorded immediately upon receipt in the cash12.42 registers or cash receipt book? Does the information recorded include: date, payer, amount, method12.43 of payment, purpose of payment, cashiers name?12.44 Is a receipt issued for every remittance made in currency?12.45 Are receipt forms pre-numbered and periodically accounted for? Are these pre-numbered printed receipts have any linkage to the12.46 System generated Receipt Vouchers?12.47 Are cash collections balanced to receipts daily?12.48 Is cash shortage for each cashier documented and investigated? Are cash shortages made up from a cash difference fund rather than12.49 being offset against overages? Are there procedures to establish accountability for cash and related12.50 items (Cheques, Credit Cards, Receipts, etc.) Are cash and related items (Cheques, Credit Cards, Receipts)12.51 physically safeguarded against theft and loss? Are cash shortages identified, analyzed, recorded, and reported12.52 immediately? Are all the cash collections deposited within one business day of12.53 receipt?12.54 Is someone independent of the cash receiving process, reviewing and approving void and refund transactions? Are security personnel or anybody held responsible or accountable for12.55 mail used to transport deposits to the cash officer or to the local bank? 21
  22. 22. XYZ Co., Dubai [Internal Control Questionnaires]  Electronic Transfers12.56 Is there a written policy for Electronic Payments?12.57 Is the staff aware of the policy for accepting Electronic Payments?12.58 Is there a proper record for bounced cheques?12.59 Is there a separate record-keeping for Electronic Payments? Are Electronic Transfers matched with written confirmation from the12.60 sender?  Monitoring12.61 Does the company have an approved Cash Management Plan on file?12.62 Does the company have an approved Delegation of Disbursing Authority on file? Is an effective control maintained over receipts of gifts, grants,12.63 donations, etc. and is a follow-up made by a responsible official to see that they have been classified and recorded properly? Are funds periodically counted by a person other than the custodian at12.64 unannounced times?12.65 Does management approve or spot chequereconciliations? Are policies documented for changes in a new system or method for12.66 accounting for cash?12.67 Are timely corrective actions taken in cash discrepancies? 22
  23. 23. XYZ Co., Dubai [Internal Control Questionnaires]13 Payments No. Description Ref. Y/N N/A Are the following duties distributed among at least two individuals: Authorize payments? 13.1 Have custody of cash? Record payments? Reconcile cash payments? 13.2 Is there a policy that clearly defines authorized payments? Is the business purpose clearly documented on all invoices and other 13.3 claims submitted for payment approval? Are all approved payments supported by proper documentation such 13.4 as original vendor invoices? Are approved vendor invoices and other approved claims promptly 13.5 entered into General Ledger for payment? 13.6 Are payments made only against budgeted accounts? Are cash advances prohibited unless specifically authorized by Board 13.7 policy or the Auditor or the Financial Controller? Are blank cheques, warrants and signature plates safeguarded in 13.8 physically secure areas? 13.9 Do only authorized personnel sign cheques and claims? Are changes in the list of authorized signatories promptly reported to 13.10 the Auditor, Financial Controller’s office,and the banks? Do these authorized signatories review supporting documentation 13.11 before signing? Are signed warrants and cheques immediately mailed out by someone 13.12 who did not prepare them? Does the Auditor/Financial Controller specifically authorize all 13.13 Electronic Transfers of funds? 23
  24. 24. XYZ Co., Dubai [Internal Control Questionnaires] Is each electronic payment confirmed in writing or e-mail with the 13.14 intended recipient? Are there procedures to ensure that the individuals performing the monthly review of company’s disbursements for all purposes is not 13.15 the same individual who approves requisitions of travel and for other purposes? Has the company developed and implemented written procedures 13.16 regarding the initiation, review, and approval of all non-payroll expenditures? Are all expenditure transactions and related vouchers independently reviewed for completeness, accuracy, and compliance with company 13.17 policies and in agreement with supporting documentation before being approved for payment?14 Cash on Hand &in Banks No. Description Ref. Y/N N/A 14.1 Is cash on hand safeguarded in a physically secure area? 14.2 Are cash receipts in process properly secured? Are cash receipts deposited promptly into the company treasury or 14.3 bank accounts as appropriate? Are bank accounts authorized by laws, the Board of Directors, the 14.4 Auditor and Financial Controller or the Treasurer, as appropriate? Are bank accounts established in the names of authorized company 14.5 officials? 14.6 Are cash balances reconciled monthly with bank statements? Are bank reconciliations reviewed by a senior officer for proper 14.7 disposition of reconciling items? Are all bank account balances reported to the Auditor and Financial 14.8 Controller at the end of the fiscal year? 24
  25. 25. XYZ Co., Dubai [Internal Control Questionnaires]15 Deposits to Company Treasury No. Description Ref. Y/N N/A Are collections transmitted from site/branch offices to head office 15.1 through secure means within a reasonable time? 15.2 Is the money transmitted verified at both ends of the transmission? Is the money collected deposited intact and promptly (at least weekly) 15.3 into the Company Treasury? 15.4 Are deposit records reconciled to cash receipt records?16 Cash Funds No. Description Ref. Y/N N/A Are cash funds established only pursuant to Code, Board resolution 16.1 or Auditor or Financial Controller’s authorization? Does the department Finance Officer maintain an inventory of all 16.2 cash funds, showing location, amount and custodian? Are procedures for use of cash funds clearly established and do they include: Clear definition of authorized uses? 16.3 Prior approval of expenditures? Restrictions on amount and type of purchase? Requirement for receipt? Cancellation of receipt upon reimbursements? 16.4 Is an authorized chart of accounts used to code disbursements? 16.5 Are replenishment requests based on actual expenditures? 16.6 Are cash funds periodically counted and verified by supervisors? 16.7 Is the level of usage monitored to detect and close inactive funds? Is only Chief Accountant authorized to transact business on the 16.8 company’s bank accounts? 25
  26. 26. XYZ Co., Dubai [Internal Control Questionnaires]17 Investments No. Description Ref. Y/N N/A Whether the Rules and Regulations governing the Company Permit for 17.1 investments by the company? 17.2 Are there any restrictions or limitations for any of such investments? Do flowcharts exist that document investment processing and identify 17.3 control procedures? Are there written policies and procedures that document the flow of 17.4 investment processing and identify control procedures? Are there policies and procedures established to ensure investment 17.5 certificates are received or appropriately reflected in the custodial accounts? Are investment purchases recorded in the general ledger on the date 17.6 traded? Does the documentation easily accessible to all persons needing it to 17.7 perform their job? Are policies and procedures established to ensure the acquisition and 17.8 disposal of investments are properly recorded? Are the policies and procedures established to ensure the investment 17.9 income received is recorded properly? 17.10 Does investment income earned get recorded on a timely basis? 17.11 Are investment earnings credited to the proper fund? Is the acquisition and disposal of investments authorized by a person 17.12 with approval authority? Are investment guidelines formally established and periodically 17.13 reviewed? 26
  27. 27. XYZ Co., Dubai [Internal Control Questionnaires] Have authority and responsibility been established for investment17.14 opportunity evaluation and purchase? Has the level and nature of approval required to purchase or sell an17.15 investment been established? Are the following duties generally performed by different people: Cash flow management, investment transactions, safeguarding the investments, responsibility forthem and recording them? Record-keeping functions for securities and income separate from those having access to physical securities, those authorizing security transactions, and those having duties in the cash area?17.16 Initiating, evaluating, and approving transactions segregated from those for detail accounting, general ledger? Monitoring investment market values and performance from those for investment acquisition? Maintaining detail accounting records segregated from those for general ledger entries? Custodial responsibilities for securities or for other documents evidencing ownership or other rights assigned to an official who has no accounting duties? Does a governing body or statute restrict investments by type and/or17.17 amount? Can officials override these restrictions with proper authorization? Are investment certificates and interest coupons sufficiently17.18 safeguarded? Are securities released from the vault only upon authorization of a17.19 person responsible for cash flow and for investment transactions? Is it necessary for more than one person to authorize the release of a17.20 security from safekeeping, or to have access to the safe deposit box or vault?17.21 Are individuals with access to securities bonded?17.22 Are securities transported by armored truck? Are all securities held or registered in the name of the companyor the17.23 Treasurer if applicable? 27
  28. 28. XYZ Co., Dubai [Internal Control Questionnaires] Are detail records maintained that include the following information, if applicable, on each evidence of ownership:17.24 Date of acquisition, identification and purchase amount or cost? Physical location of item, i.e., safe deposit box, etc.? Interest dividend, or income rates and accrual or receipt dates? Ownership by fund? Do procedures exist for reconciling the detail accounting records with17.25 the General Ledger control? Do specific procedures exist for tracking maturing investments and17.26 interest payments? Is the investment program integrated with the cash management17.27 program and expenditure requirements? Is cash in excess of operating needs invested in accordance with laws17.28 and regulations? For invested funds, is an approved investment policy followed to17.29 ensure a prudent and average return on capital? Are investment results monitored for compliance with laws and17.30 policies?17.31 Are investment managed by expert personnel?  Monitoring Is the classification of investments in the General Ledger periodically17.32 reviewed? Are these classifications properly documented by management? Does a responsible official determine that the income earned is17.33 credited to the proper fund? Is the performance of the investment portfolio periodically evaluated17.34 by persons independent of investment portfolio management activities? Are appropriate personnel authorized to release securities from17.35 safekeeping authorized by the governing body? 28
  29. 29. XYZ Co., Dubai [Internal Control Questionnaires] Are securities or legal documents or agreements evidencing ownership or other rights kept in a vault with limited access, or 17.36 preferable, protected in a safe deposit box, on deposit with a corporate trustee, or broker? Does the management periodically count securities and reconciled 17.37 them to the records? Are periodic surprise counts of evidence of ownership made and 17.38 reconciled to detail records and other controls? Are securities periodically inspected or confirmed from safe-keeping 17.39 agents? Are periodic comparisons made between income received and the 17.40 terms of the security or publicly available investment information?18 Revenue Enhancement, Market Trends & Updates No. Description Ref. Y/N N/A 18.1 Is staff encouraged to find ways to enhance existing revenues? Is there a procedure to continuously identify new revenue sources, 18.2 including new projects, programs and contracting out excess capacity? Are new revenue sources evaluated to identify all associated burdens 18.3 including match and earmarking requirements? Are new revenue sources applied for or explored only upon executive 18.4 management or Board approval? 29
  30. 30. XYZ Co., Dubai [Internal Control Questionnaires]19 Cost Recovery: Allocation & Apportionment No. Description Ref. Y/N N/A Are the costs of services provided or goods supplied computed or 19.1 estimated? Are the types and extent of costs that are recoverable from external 19.2 sources determined? Are all allowable costs including indirect costs included in the 19.3 computation? Are billing rates and service fees reviewed periodically to ensure that 19.4 costs are recovered to the fullest extent allowable? With the full recovery of costs, is there any excess charge for margin of profit in case of: 19.5 Services provided? Materials supplied? Tender & other quotes?20 Billing to Customers No. Description Ref. Y/N N/A Are the following duties segregated among at least two people: Approve billings? 20.1 Prepare billings? Posting revenue & receivable records? Accepting payments? Reconciling billings & receivable records? Does the company have a Works Billing Manual defining the 20.2 procedures to be undertaken for Billing Works done under varied category of Construction works? 30
  31. 31. XYZ Co., Dubai [Internal Control Questionnaires]20.3 Are the billings done as per the Contractual Terms with the Client?20.4 Are all the claimable costs identified and billed timely? Is there a procedure to ensure that all completed work orders are20.5 billed? Are the items claimed in the bills verified by the Senior official20.6 situated in the Head Office? Are cost claims prepared and submitted in accordance with20.7 reimbursement requirements? Are internal billings done timely to allow for timely billings to20.8 external parties? Do billings include all relevant detail: Details of the Project? Relevant Payment Application number? Billing date? Valuation Period?20.9 Name & address of Client, Consultant & Owner? Revised break-up of Contract Value? Project commencement date? Original & revised completion date of Project? Value & Percentage of Performance Bond? Value & Percentage of Advance Payment Bond? Retention Percentage?20.10 Are billings checked for accuracy before mailing?20.11 Are billings promptly recorded in the ledgers for follow up purposes? 31
  32. 32. XYZ Co., Dubai [Internal Control Questionnaires]21 Accounts Receivables No. Description Ref. Y/N N/A Is there a formal organizational chart defining responsibilities of preparing bills, follow-up for certification, receipt of payment 21.1 certificates, recording the payment certificates, collecting the accounts receivable on due date of payment certificates and follow up of accounts not paid? 21.2 Is follow-up done for converting Billings into certified receivables? Are the items of Certified Works & Claims compared with the 21.3 corresponding items of Billed Works & Claims? Does the analysis statement is produced before the Management to 21.4 acknowledge for major variances? 21.5 Are the clarifications sought from the Client for any such variances? 21.6 Is follow-up done for converting certified receivables into cash? Does the company have written credit and collection policies that meet the requirements of contractual terms, the Accounts Receivable 21.7 program and other policies and procedures established by the management and the legal advisor? Have procedures been documented to collect monies due within the 21.8 contractual payment terms? Have procedures been adopted to notify the legal advisor’s office and 21.9 follow through the collection after reasonable period of delay in payment? Are remittance advices and billings retained to support entries to 21.10 accounts receivable records? Do procedures exist to prevent the interception or alteration by 21.11 unauthorized persons of billings or statements after preparation but before they are mailed? 32
  33. 33. XYZ Co., Dubai [Internal Control Questionnaires] Does the company have established policies and procedures21.12 concerning refunds of overpayments, issuance of billing adjustments? Are subsidiary accounts receivable and notes receivable records21.13 maintained? Are subsidiary accounts reconciled at least monthly with the General21.14 Ledger control account? Are individual receivable records posted only from authorized21.15 documents? Are data bases and where appropriate usage records accurately21.16 maintained to ensure that amounts due are billed correctly?21.17 Are statements of account balances mailed at least once a month?  Writing-off Receivable Balances Has an allowance account been established for doubtful accounts to21.18 reflect the amount of the company’s receivables that the management estimates will be uncollectible? Does there any Accounting Policy for writing-off accounts receivable21.19 after certain period of its overdue position? Does any such write-offs are brought to the notice of the21.20 Management and Board for their prior approval? Are accounts written-off the Company’s financial accounting records21.21 when all collection procedures have been exhausted without success?21.22 Are reasons for writing-off an account adequately documented? After write-off, does the company continue to follow up for recovery21.23 of written-off dues?  Collection of Receivables Is the accounting department notified directly and in a timely manner21.24 of billings, certifications and collection? 33
  34. 34. XYZ Co., Dubai [Internal Control Questionnaires] Are the following duties generally performed by different people: Billing, collecting, and cash application of accounts receivable funds? Maintaining detail accounts receivable records, collecting, and General Ledger posting?21.25 Writing-off or adjusting to accounts receivable and the maintenance of accounts receivable records? Investigating disputes with billing & certified amounts and the maintenance of accounts receivable records? Reconciling, investigating reconciling items and posting detail accounts receivable records? Are all collections on accounts receivable posted to individual21.26 receivable accounts? Is access to the accounts receivable accounting system limited only to21.27 authorized individuals?  Monitoring Are corrections and adjustments to cash receipts documented and21.28 approved by a senior official? Are all non-cash credits, such as credit memos, allowances, and bad21.29 debts properly authorized? Is an aging schedule prepared monthly and is it reviewed by a21.30 responsible manager?21.31 Are delinquent accounts followed up? Are all legal remedies followed to collect write-offs or uncollectible21.32 accounts with the legal advisor? Are accounts periodically reviewed for propriety of transactions and21.33 balances by a person independent of cash and accounts receivable accounting? Are remittances promptly applied against outstanding billings21.34 /receivables? Is there a procedure to follow up on overdue accounts and refer them21.35 to the Office of Revenue and Reimbursement or other collection company as appropriate?21.36 Are follow up and collection activities properly documented? 34
  35. 35. XYZ Co., Dubai [Internal Control Questionnaires] Are detailed receivable ledgers periodically reconciled to General 21.37 Ledger? Are aged receivable listings prepared periodically to identify old 21.38 unpaid accounts? Are receivables and collection activities reported to the Auditor/ 21.39 Financial Controller in the prescribed format? Are uncollectible accounts identified and submitted to the Board of 21.40 Directors annually for discharge of accountability?22 Inventory: Goods, Materials & Stores No. Description Ref. Y/N N/A Is there a formal organizational chart defining the responsibilities of 22.1 ordering, accepting, approving, processing and recording of the inventory? Are the policies established to ensure that inventories are not 22.2 stockpiled or to prevent over-ordering? Are the policies established to ensure that obsolete and inactiveitems 22.3 in inventory are sent to Scrap Inventory Department? 22.4 Is there any Central Stores Room for centralized receipt of goods? Are the inventories properly maintained in the Store Room to identify 22.5 them with the associated Project/Contract/Subcontract? Are steps documented to ensure that goods received are accurately 22.6 counted and examined to see that they meet quality standardsand specifications? Is the Inventory Module properly in place to take care of proper accounting of following aspects: 22.7 Receipt of Materials? Issue/ Consumption of Materials? Transfer of Materials? Stock of Materials? 35
  36. 36. XYZ Co., Dubai [Internal Control Questionnaires] Does the company maintain perpetual inventory records and are all22.8 inventory items put on the perpetual inventory system? Are the written instructions given and explained to all personnel22.9 involved in the physical count of the inventory? Is there a proper cut-off of receipts and issues from inventory at year22.10 end? Is the accounting department notified (by issuing a receiving report)22.11 immediately upon the receipt of goods? Are entries to perpetual inventory records made timely upon the22.12 receipt of goods? Are receiving reports or vendor invoices used to record purchases to22.13 the perpetual inventory records? When issuing inventory, is the proper Cost Centre charged in the22.14 General Ledger? Is each Project/Contract site equipped with a duly trained and22.15 responsible store keeper to discharge his duties as such? Are the following duties generally performed by different people: Receiving and issuing inventory and the operational duties? Receiving and issuing of inventory and taking the physical22.16 inventory? Receiving and issuing of inventory and the approving of expenditures, recording transactions in the general ledger, and reconciliation of subsidiary records to control accounts?22.17 Is a definite responsibility designated for each inventory type? Are work orders or requisitions required to be approved by22.18 appropriately designated officials as a basis of issuing inventories? Are adjustments to inventory records approved by a properly22.19 designated official?22.20 Is there adequate physical security surrounding inventories? 36
  37. 37. XYZ Co., Dubai [Internal Control Questionnaires]22.21 Is access to inventory locations limited by physical controls?22.22 Is there enough insurance for significant inventories obtained?22.23 Are all employees responsible for inventories adequately bonded? Does the person receiving the goods sign the requisition as evidence22.24 of receipt?22.25 Are the approved and completed requisitions kept on file? Are physical inventories: supervised by someone independent of the custodial or record keeping functions? made by or tested by employees independent of the department being inventoried?22.26 recorded on permanent inventory count sheets? re-recorded on count sheets signed and dated by the person supervising the count? planned to provide provisions for cut-off of receipts and issues? reflected in the perpetual records based on the actual inventory quantities? Are pre-numbered tags/codes used during the physical inventories22.27 count? Is access to the perpetual inventory records limited to authorized22.28 individuals?  Monitoring22.29 Is a physical inventory taken at least annually? Are perpetual inventory balances reconciled against the General22.30 Ledger control accounts at least annually?22.31 Does management periodically check inventory reports/ records? Are deviations of reports followed up by management in a timely22.32 manner? Does management assess inventory policies and procedures22.33 periodically? 37
  38. 38. XYZ Co., Dubai [Internal Control Questionnaires]23 Operating Fixed Assets No. Description Ref. Y/N N/A  General Is there a formal organizational chart defining the responsibilities of 23.1 purchasing, receiving, recording, approving and performing the fixed assets? Are there formal written procedures for performing a physical 23.2 inventory of fixedassets? Is a capitalization policy established which is consistent with 23.3 Purchase and Contract requirements and UAE Government rules and regulations? If thereis any missing asset noted, is the Missing Asset Formfilled 23.4 immediately? Are assets believed to be stolen or vandalized reported to the Police 23.5 Department according to UAE law? Are construction records adequate to accumulate costs associated 23.6 with constructed fixed assets including force (in-house) labor and materials obtained from inventory? Is the individual responsible for fixed assets notified when assets are: Received? Location changes are made? Transferred to other construction sites? 23.7 Sold? Stolen, vandalized or missing? Re-assigned to a different organizational entity or to another group company? Scrapped? Are gains or losses properly recognized from disposals of fixed assets 23.8 in proprietary fund types? Are the fixed asset subsidiary accounts balanced to the fixed asset 23.9 control accounts on monthly basis? 38
  39. 39. XYZ Co., Dubai [Internal Control Questionnaires]23.10 Are property records reconciled periodically to property accounts? Are beginning balances, additions, disposals and ending balances23.11 properly reflected in the notes to the Financial Statements? Are the following duties generally performed by different people: Custodian of the fixed assets and taking the annual inventory? Reconciliation of the Fixed Asset System with the control accounts and making entries in the Fixed Asset System?23.12 Custodian of the fixed assets and tagging? Custodian of the fixed assets and investigating the missing fixed assets? Custodian of the fixed assets, making entries in the Fixed Asset System and making entries in the General Ledger? Are all disposals of property approved by a designated person with23.13 proper authority? If other than AED 5,000 capitalization threshold, has the Company23.14 management chosen and documented the threshold level in the Internal Policy/Procedure Manual?23.15 Are all assets tagged/coded? Is someone assigned custodial responsibility by location for all23.16 assets? Is access to the perpetual fixed asset records limited to authorized23.17 individuals?  Acquisitions/Additions/Procurements23.18 Are all purchases pre-approved in the budget? Are all fixed asset purchases and receipts approved by a designated23.19 person with proper authority? Are acquisitions that require a significant investment of time and23.20 resources included in the approved capital improvement plan? 39
  40. 40. XYZ Co., Dubai [Internal Control Questionnaires] Are all fixed asset additions properly valued: Is the total purchase price, less discount and any expenditure required to place asset in its intended state of operation the amount capitalized? Does the recorded asset cost of land purchases include: purchase price, legal and title fees, surveying fees, appraisal and negotiation fees, damage payments, and site preparation costs?23.21 Does the recorded asset cost of building include: purchase price, contract price or job order costs plus any other expenditure necessary to put a building or structure into its intended state of operation, including professional fees, damage claims, cost of fixtures, insurance premiums, interest, and related costs incurred during the period of construction? Are maintenance costs expensed rather than capitalized? Are specifications adequately described in the purchase order or23.22 contract to ensure high quality and correct product? Are specifications written by experts who are knowledgeable of the23.23 company needs?23.24 For larger items, is competitive bidding used? Are purchases and leases made in conformance to the company’s23.25 Purchasing Agent guidelines and applicable laws and regulations?23.26 Are the items properly inspected before acceptance?23.27 Is acceptance properly documented? Is there a procedure to check that title is properly vested in the23.28 company?23.29 Is payment of the bill made only after acceptance and transfer of title?23.30 Are fixed assets tagged/coded when procured? 40
  41. 41. XYZ Co., Dubai [Internal Control Questionnaires]  Use Are the following duties segregated between at least two individuals: Authorizing purchase, transfer or disposal of assets?23.31 Using the assets? Posting asset records? Adjusting and reconciling records to physical inventory? Are the proper usage of the assets explained clearly to employees and23.32 users? Is access to valuable or sensitive asset items restricted to authorized23.33 users only? Are authorized users provided with proper training on the correct use23.34 of the assets?  Protection Are procedures in place to safeguard valuable and sensitive assets23.35 against theft or damage? Is there adequate insurance coverage of the very high valued fixed23.36 asset items?23.37 Are items owned by the company specifically identified? Is responsibility for the safe custody and maintenance of assets23.38 assigned to specific individuals? Is a regular maintenance schedule followed to maintain the23.39 functionality and value of assets?23.40 Is warranty information safeguarded for new property items?  Accounting Are detailed records of assets maintained showing identification23.41 number, classification/grouping, description, location and original cost? Is the physical existence of the assets annually verified and reconciled23.42 to asset records? 41
  42. 42. XYZ Co., Dubai [Internal Control Questionnaires] Are new asset items promptly reported to the Purchasing Department 23.43 and the Internal Auditors’ Office? Are procedures in place to document loss, transfer and retirement of 23.44 assets? Are the Fixed Asset System and appropriate accounts reconciled 23.45 monthly? Are there procedures in place for writing-off fully depreciated fixed 23.46 assets?  Monitoring Are the Physical Inventory Worksheets approved by the Chief 23.47 Financial Officer/ Financial Controller before the fixed asset officer makes changes to the Fixed Asset System? 23.48 Is such insurance coverage independently reviewed periodically? Has the Internal Policy/Procedure Manual been kept up to date with 23.49 any changes in the company, or company philosophy? 23.50 Is a physical inventory taken at least annually? Is a physical inventory of capitalized assets and inventoried items taken 23.51 each time there is a change at a management or supervisory level that has responsibility for the assets? 23.52 Are missing items investigated and reasons for them documented?24 Purchasing & Payables No. Description Ref. Y/N N/A  Requisition Are materials/ services requisition forms used for any of the 24.1 requirement from the Site? 24.2 Is the need properly assessed, reviewed and approved by a supervisor? 24.3 Does such requisitions addressed to the Central Stores Room? 42
  43. 43. XYZ Co., Dubai [Internal Control Questionnaires] Is there a procedure to explore all options to satisfy the needs,24.4 including options within current resource constraints, before a purchase is authorized? Are items to be purchased specified in sufficient detail in the24.5 requisition to minimize risk of erroneous purchases?24.6 Are the detailed specifications verified by the requestor? Does the requisition form refer to the availability of approved24.7 budgeted expenditure towards the purchase requirement?  Authorization Is the requisition authorized by a person designated by the department24.8 head on the Authorization Form on file with the Auditor and Financial Controller? Is the authorizing official certifies the amount available in the Project24.9 Budget towards the purchase requirement?24.10 Is the authorization properly documented?24.11 Are approval limits on department heads and CAO observed? Is there a procedure to verify that there is sufficient balance24.12 inappropriations to cover this purchase?  Methods of Purchase Are purchasing guidelines in the Company Policy and Procedures’24.13 Manual followed? Are the following contractual proceduresobserved with respect to each of the purchase requirement: Are copies of all supplier enquiries forwarded to the Central Purchase Department? Is the list of suppliers to whom the enquiries are forwarded is made available to CPD?24.14 Are quotes received fromany additional suppliers as recommended by CPD? Is comprehensive quotation comparison statement prepared and forwarded to CPD for its comments? Are the comments from CPD observed before purchase is affected? Are the signed and approved (by CPD) quotation comparison 43
  44. 44. XYZ Co., Dubai [Internal Control Questionnaires] statements brought to the notice of Internal Auditor for acknowledgement of adherence to the agreed purchase procedure?24.15 Are purchase orders used only for goods and not for services? Is a contract used for purchases of complex items such as computer24.16 systems or large equipment, which need special delivery or expert installation?24.17 Is the use of confirming requisitions limited to emergency situations?24.18 Is competitive bidding used to the extent practicable?  Receiving Are goods and services inspected upon delivery for conformance with24.19 purchase order?24.20 Are incomplete deliveries promptly followed up?24.21 Are non-conforming goods promptly returned to vendors?24.22 Are vendors promptly notified in writing of non-conforming services?24.23 Are goods and services received documented in writing?  Payables24.24 Are only original invoices accepted for processing?24.25 Are vendor invoices processed promptly upon receipt? Are invoices matched with receiving reports or other evidence of24.26 receipt?24.27 Are invoices checked for accuracy? Is the Exception Form used to request approval by the Auditor and24.28 Financial Controller for all exceptions to the company policies and procedures?24.29 Are paid invoices immediately canceled? 44
  45. 45. XYZ Co., Dubai [Internal Control Questionnaires]25 Payroll No. Description Ref. Y/N N/A  Time Entry 25.1 Are employees required to maintain attendance records? 25.2 Is the Time Sheet (HRMS) Module is properly in use? Do attendance records contain sufficient detail on work assignment 25.3 for labor cost distribution purposes? 25.4 Are attendance records in compliance with Labor Code requirements? Are attendance records approved by supervisors before submission to 25.5 payroll department with direct knowledge of actual time worked? 25.6 Are approved attendance records used to prepare payroll time entry? Are Time Cards or Sheets signed and submitted by employees at the 25.7 end of (or the last day of work) the period? Is all overtime and compensation time recorded on the company’s 25.8 Payroll System? Are the overtime payments take care of UAE Labor Law provisions 25.9 with respect to 1.25 times & 1.5 times of the normal wage payment? 25.10 Are the employees paid for Vacation or Sick Time in advance? 25.11 Are accumulated leave records reviewed at year-end?  Payroll Distribution Is staff preparing payroll precluded from access to payroll checks and 25.12 statements? Are payroll checks and statements distributed by supervisors or 25.13 managers who know the employees? Is there a procedure to safeguard payroll checks and statements before 25.14 it is delivered to the correct recipients? 45
  46. 46. XYZ Co., Dubai [Internal Control Questionnaires] Is there a procedure to ensure that the payroll checks or statements are25.15 delivered timely to the correct employees in their absence? Are payroll distribution procedures in compliance with Labor Code25.16 requirements? While approving payroll, does anybody review the Payroll Voucher25.17 Verification Report at the end of each payroll period?  Payroll Records Are payroll and employee records safeguarded in compliance with25.18 Labor Code requirements?25.19 Are payroll records retained for at least three years? Are changes in employee information promptly transmitted to HR25.20 Department and the Internal Auditor’s Office? If employees perform services outside the normal scope of their25.21 employment, are they paid in accordance with the Company Policy? Are all or most of the following payroll duties performed by the same person?25.22 Preparing and entering the data Approving payroll information Distribution of checks and vouchers25.23 Is payroll prepared for staff and laborers separately? 46
  47. 47. XYZ Co., Dubai [Internal Control Questionnaires] Section II: Summary of ResultsResponding Person:Name: ____________________________________________________________Designation: _______________________________________________________ Summary Results1: __________________________________________________________________________________________________________________________________________2: __________________________________________________________________________________________________________________________________________________3: __________________________________________________________________________________________________________________________________________________4: __________________________________________________________________________________________________________________________________________________5: __________________________________________________________________________________________________________________________________________________6: __________________________________________________________________________________________________________________________________________________I certify that the foregoing responses are accurate to the best of myknowledge, understanding and comprehension taken from the companymanagement.Completed by: ______________________________ Date: __________________Reviewed by: _______________________________ Date: __________________ 47
  48. 48. XYZ Co., Dubai [Internal Control Questionnaires] Section III Human Resources Planning, Control& Management [Covered in Table 26] 48
  49. 49. XYZ Co., Dubai [Internal Control Questionnaires]26 Human Resources: Planning, Control& Management No. Description Ref. Y/N N/A  Recruitment Are skills and abilities required for positions clearly defined by the 26.1 managers responsible for those positions? 26.2 Are the Professional Certifications/Degrees based on actual skills and abilities required for the job? Does the description of job responsibilities for the position match the 26.3 responsibilities stipulated for the classification? Is the compensation package designed to attract and retain qualified 26.4 candidates? Where the proposed compensation package exceeds AED 350,000/-, is 26.5 the prior approval of the Board obtained and kept on record? (this clause depend company to company, so shall be changed accordingly.) Are job openings advertised widely to attract the highly qualified 26.6 applicants? Is the selection process designed to hire the best candidates for the 26.7 positions? 26.8 Is the recruitment based on the pre-approved Organization Chart?  Compensation 26.9 Are surveys made periodically to benchmark compensation?26.10 Are adjustments made to bring compensation closer to benchmark? Are employee salaries based on the salary ordinance adopted annually26.11 by the Board of Directors? Are benefits awarded to employees in accordance with UAE Labor26.12 Code? Do the proper managers authorize changes in classification26.13 orcompensation? 49
  50. 50. XYZ Co., Dubai [Internal Control Questionnaires] Are reasons for changes in compensation or classification properly26.14 documented in the files? Are the changes in compensation/classification properly approved by26.15 HR analysts?  Job Responsibilities26.16 Is each employee assigned specific job responsibilities in writing? Is any employee assigned with duties to contribute to the betterment of26.17 the parent company or the sister companies? Does the fixing of Global Duties to any such employee have hindered26.18 the effective working of the company?26.19 Are significant changes in assignment documented in writing?26.20 Are key job responsibilities approved by the department head? Do statements of job responsibilities indicate clearly show employees26.21 are expected to contribute to the Company goals? Do all managerial staff exhibit high ethical values, personal and26.22 professional integrity and compliance with the company policies and procedures?  Training Are resources and tools required by employees to carry out26.23 theirresponsibilities identified? Is the training required by employees to maintain their skills26.24 identified? Are funds budgeted to acquire the required resources, tools and26.25 training? Are personnel cross-trained or have it developed other plans for the26.26 replacement or back-up of key personnel?26.27 Is the staff regularly informed on how to report fraud or misconduct? Have the personnel, who initiate, approve, or review financial26.28 transactions, received appropriate training on the various financial systems? 50
  51. 51. XYZ Co., Dubai [Internal Control Questionnaires] Are the personnel in operations are familiar with the company’s26.29 policies and procedures based on most update knowledge of rules and regulations?  Employee Performance26.30 Are performance standards or expectations clearly established? Is performance assessed periodically against the standards26.31 anddocumented?26.32 Are positive results reinforced through recognition or awards?26.33 Is action taken to improve performance that is below standard?  Communication Are the company goals and departmental goals spelled out clearly for26.34 all employees to see? Are important instructions such as project/contract assignments given26.35 out in writing? Do instructions include the following details, at minimum:26.36 Names of responsible persons, Date of completion and Expected results?26.37 Do employees get feedback on the results achieved? Is there a way through which employees can freely express their26.38 concerns and suggestions to their managers? Are the managers required to follow up and respond to their26.39 employees’ concerns and suggestions? 51
  52. 52. XYZ Co., Dubai [Internal Control Questionnaires] Section III: Summary of ResultsResponding Person:Name: ____________________________________________________________Designation: _______________________________________________________ Results Summary1: __________________________________________________________________________________________________________________________________________2: __________________________________________________________________________________________________________________________________________________3: __________________________________________________________________________________________________________________________________________________4: __________________________________________________________________________________________________________________________________________________5: __________________________________________________________________________________________________________________________________________________6: __________________________________________________________________________________________________________________________________________________I certify that the foregoing responses are accurate to the best of myknowledge, understanding and comprehension taken from the companymanagement.Completed by: ______________________________ Date: __________________Reviewed by: _______________________________ Date: __________________ 52
  53. 53. XYZ Co., Dubai [Internal Control Questionnaires] Section IV Financial Planning, Accounting &Reporting [Covered in Table 27] 53
  54. 54. XYZ Co., Dubai [Internal Control Questionnaires]27 Financial Planning, Accounting &Reporting No. Description Ref. Y/N N/A  Design of System Is there annual review of the design of accounting and internal control 27.1 system for up-dating it according to the changing needs of the company and computer technology? Is there a formal schedule with target dates for completing tasks 27.2 associated with closing the General Ledger and preparing Financial Statement worksheets? Is there a formal plan of organization under which responsibilities for 27.3 closing the General Ledger and Financial Statement worksheets are clearly defined? Are policies and procedures established concerning year-end cut-off of 27.4 accounting transactions? Does the company maintain documentation of written procedures 27.5 covering the recording of transactions? Does this documentation contain a chart of accounts explaining what 27.6 items are charged to each line account? Do relevant employees have access to this information? Does the company maintain and follow procedures for record filing, 27.7 retention, and disposition?  Book-Keeping & Financial Accounting 27.8 Are all financial transactions promptly entered into SOFTWARE? 27.9 Are the source documents maintained to provide an audit trail? If Subsidiary Ledgers are maintained, are they reconciled to27.10 SOFTWARE on monthly basis? Is there record retention policy that satisfies statutory and audit27.11 requirements?27.12 Have the accounting records been audited in the past five years? Have adequate training been provided to accounting and finance staffs27.13 on SOFTWARE? 54
  55. 55. XYZ Co., Dubai [Internal Control Questionnaires] Are journal entries approved, including a review of supporting27.14 documentation?  Financial Reporting Is it required that trial balances, adjustments and supporting work papers be maintained to support the process of closing the General27.15 Ledger and preparing Financial Statements and Financial Statement worksheets? Are financial reports prepared only from General Ledger data or27.16 accounting data that reconcile with General Ledger? Are worksheets and schedules attached to journal entry accounting27.17 code sheets and are they secured in a safe location? Is a schedule followed to ensure timely preparation and filing of27.18 statutory reports?27.19 Is the usefulness of internal financial reports periodically evaluated?27.20 Are financial reports submitted timely to requestors or users? Are Financial Statements (or Financial Statement worksheets)27.21 reviewed by the CFO for accuracy and consistency?  Disclosure of Unusual Transactions Is the certification required from operating contracts and projects that27.22 information submitted for the preparation of the Financial Statements is correct and up to date? Is informative disclosure required in the Financial Statements and the accompanying notes as requiring the accumulation of information concerning: Commitments?27.23 Contingencies? Related party transactions? Accounting principles? Fund classifications? Subsequent events? Otheraccounting disclosures? Are transactions subsequent to the balance sheet date reviewed for27.24 proper classification? 55
  56. 56. XYZ Co., Dubai [Internal Control Questionnaires]  Reconciliation of Accounts & Balances27.25 Are investments reconciled to control accounts at year-end?27.26 Are intra-company transfers reconciled at year-end? Are intra-company inter-fund receivables and payables reconciled at27.27 year-end? Are amounts designated for subsequent years expenditure reconciled27.28 to budget authorizations? Are the beginning fund balances or retained earnings reconciled to27.29 amounts reported in prior years? Are reconciliations of Subsidiary Ledgers to control accounts27.30 performed and reviewed by a responsible person? Are inter-company transfers of goods/equipments/materials/services27.31 (all kind of resources) reconciled before the closing of the year? Are Financial Statements (or Financial Statement worksheets)27.32 reconciled to the General Ledger before being transmitted to the Financial Controller/CFO? Are bank reconciliation statements prepared on monthly basis and27.33 accounts are adjusted accordingly?27.34 Are bank reconciliations reviewed at each month end?27.35 Is the bank reconciliation statements’ file maintained separately?  Segregation of Duties Are the following duties generally performed by different people: Preparing and reviewing the Financial Statements? Preparing and reviewing journal entries?27.36 Accumulation of accounting information (inventories, estimates, etc.) and custody of related assets? Preparing and reviewing worksheets and schedules supporting the accounting information? Performing and reviewing reconciliations?  Review of Accounting Estimates27.37 Do only authorized persons review departmental budgets? Are investments earning calculations and accruals reviewed at year-27.38 end? 56

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