Documentation Of The Internal Control System. The auditor’s documentation of the internal control system should reflect an understanding sufficient to plan the audit. Rio Duro is a retail clothing business owned by Monica Luna and operated out of her home on a part-time basis. Her accounting system has as inputs a sales slip for all her sales (sold for cash with no accounts receivable), invoices for her purchases and expenses (she has no accounts payable). She enters the transactions in a general journal and posts once per month to a general ledger. She does all the accounting herself, holds the cash, orders and sales of the merchandise.

Required

A. What characteristics should be described in the documentation of the internal control system?

B. What are the methods for documenting the internal control structure?

C. Using Rio Duro as an example, document the internal control based on the characteristics in

‘A’ using each of the documentation methods in ‘B’.