Evaluation of Internal Control from a Control Objective Narrative

Many accounting firms have changed the way their auditors evaluate internal control. Instead of preparing flowcharts documenting transaction flows, they only document the controls that have a bearing on specific financial statement assertions. This shift in documentation marks a change in the structure of the internal control evaluation task from transaction flow to control objective. This case presents documentation organized by control objective for internal control of a company's purchasing cycle. The case includes discussion and objective format questions and is relatively short, which means it can be used as an in‐class or out‐of‐class exercise or an in‐class testing or assessment device on internal control evaluation.