A flowchart is a type of diagram that represents a workflow or process. It shows the two most common items in a flow: Processing steps (as boxes) and Decisions (as diamonds). The order, or sequence, of the various activities, is shown by arrows and they are used to design, analyze, document and manage processes. These flowcharts answer the question: What Happens?
A Picture is worth a thousand of words, a flowchart can present a wealth of information for precisely describe internal control policies for auditing purpose, which can be used for communication with different levels of management, audit, and auditees within the audit process and the benefits includes:
- Granular process operation discussions with line management;
- Strategic and process design discussions with mid and upper management;
- Operational reliance discussions between multiple lines of business;
- An efficient way of describing highly complex processes; and
- Knowledge gaps in the process are easier to identify.
Elements of Internal Control and Auditing
Flowcharts can be modeled from the perspective of different user groups (such as managers, system analysts, and clerks), and that there are four general types:
- Document flowcharts, showing controls over a document-flow through a system
- Data flowcharts, showing controls over a data-flow in a system
- System flowcharts, showing controls at a physical or resource level
- Program flowchart, showing the controls in a program within a system
A flowchart for internal control and auditing consists of a mixture of elements from these four general types as follows:
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Flowchart Example for Internal Control and Auditing – Payroll Function
The example below describes a Payroll function scenario using a flowchart for internal control purposes. It starts from the felicitous employee “Joe” who complete the time record and submitted it to his supervisor, verified by Sven – the accountant and eventually issue a paycheck by Tami. Finally, the Summary payroll reports will be automatically generated by the system for internal auditing.