Question

Compare the difference in the assessment of the internal control of a: 1.Large company during an audit. 2. Mmedium company during an audit. 3. Small company during an audit.

Answer 1

1. Internal control in large company during an audit

Internal control in a large company is complex in nature. The auditor wants to assess the internal control carefully, because it is a tough work to the auditor. In large business organisation, the accounting duties such as vouching, posting, balancing etc are done by different personnels. So, the auditor wants to check every nook and corner of the accounting system. Large organisation usually makes daily or weekly trial balances, periodic reconciliations in accounting systems inorder to minimise the work burden. Large company have huge number of transactions, large number of employees, bundle of books of accounts etc. so, the auditor wants to critically evaluate every item or  every one to assess the quality of internal control. Auditor appoints a few number of clerks to help him in the audit work.

2. Internal control in medium company during an audit

Internal control in medium company is less complex than large companies and more complex than small companies. Here, the auditor have less burden when compared to large companies. Here also the accounting duties of vouching, posting, balancing, totalling etc are done by different personnels. There is less chance for the preparation of daily or weekly trial balances, periodic reconciliations in accounting systems in medium companies. They have lesser number of transactions, number of employees, books of accounts etc when compared to large companies. Here also the auditor wants the assist of clerks to attain his audit objectives.

3. Internal control in small company during an audit

Internal control in small company is more easier for auditors. Here, the burden of auditor is less compared to other companies. The accounting duties of vouching, posting, balancing, totalling etc are usually done by a single person. There is no chance for the preparation of daily or weekly trial balances, periodic reconciliations in accounting systems in small comapnies. Small companies usually have smaller number of transactions, less number of employees, less number of books of accounts etc. Here the auditor can complete the audit work by himself and dont want any assistance.