Auditing and EthicsQuestion 5681 of 212
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10. The method suggested by first team member according to which, a series of instructions and/or questions which a member of the auditing staff must follow and/or answer. When he completes instruction, he initials the space against the instruction. This method is called as

Options

AFlow Chart
BCheck List
CNarrative Record
DQuestionnaire (2 Marks)
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Correct Answer

Option BCheck List

All Options:

  • AFlow Chart
  • BCheck List
  • CNarrative Record
  • DQuestionnaire (2 Marks)

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Detailed Solution & Explanation

Correct Answer: Option **B**

Explanation:
Let's analyze the methods for evaluating internal controls from first principles:

1. **Check List**: A Check List consists of a series of instructions and/or questions that the auditing staff must follow and/or answer. Upon completing each instruction, the staff member initials the space provided against that instruction. This serves as a control tool for the auditor to ensure that the team completes all programmed audit procedures.
2. **Questionnaire (Internal Control Questionnaire - ICQ)**: This is a comprehensive series of questions prepared by the auditor and issued to the client. The client's employees fill in the answers (usually 'Yes', 'No', or 'Not Applicable'). It is used to gather information from the client's perspective.
3. **Narrative Record**: This is a complete, detailed, and exhaustive written description of the internal control system in operation, recorded by the auditor during their walkthrough.
4. **Flow Chart**: A Flow Chart is a graphic or pictorial representation of the internal control system, depicting the sequence of operations, document flow, and departments involved.

The method described in the question, where the auditing staff follows a series of instructions and initials the space upon completion, is a **Check List**.

Hence, **Option B** is the correct answer.

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