1. An overall organization chart. We need a chart that will show the principle departments of the company together with the description of their functions and the number of people employed therein. The titles and names of all responsible officials should be recorded along with their lines of responsibility within the organization.
2. A list of the principal books of accounts with a brief description of how each are kept. Records can be kept in many ways, ranging from hand written ledgers through accounting machines to the most sophisticated real time computerised data processing systems. It is essential to have precise details of the methods used.
3. Information as to accounting information flows and controls: this is usually in the form of flow-charts. Anyway whatever method is used it is important to record the person who is responsible at each stage for the authorising, the recording and the custody of relevant assets and records.
4. Narrative notes on appropriate accounting controls particularly with reference to the accountability of employees in each audit area. By this we mean for example authority limits for cheque signatories together with their specimen signatures and in addition a brief description would also be included on any other controls.

After recording the system in whichever way, the auditor needs to corroborate the records. Corroboration means confirming that what he has recorded is what actually takes place. Corroboration is done by use of a walk through test. This involves collecting samples on a judgemental basis of one or two transactions and following them through the system as recorded. The walk through test confirms the records and also confirms the auditors understanding of the system. After corroboration, if it is the system of accounting, the auditor will perform tests and from the results of those tests he will assess its adequacy as a basis for the preparation of the financial statement. To this end I refer you to the chapter on Accounting systems and implications. If it is a system of internal control, after corroboration, the auditor seeks to evaluate those controls. Evaluation of controls is carried out from three points of view with the sole aim of being able to establish whether the system constitutes a reliable basis for the preparation of annual accounts and to determine the required amounts of substantive testing. If internal control is weak it may not be possible to express any opinion at all on the accounts presented. On the other hand, a strong system of internal control can minimise the amount of substantive testing used in arriving at an opinion. The three points of view mentioned are:

1. To consider the possibility of fraud;

2. possibility of undiscovered errors occurring and

3. possibility of accounts being deliberately distorted