The process of manual designing includes:
> Studying the of flow of each type of transaction errors and those relevant controls that provide reasonable assurance that errors are either prevented or detected and corrected.
> Test of controls for determining their effectiveness i.e. whether controls are responsive to the inherent risk factors. We also consider the potential impact of inherent risk factors in control objective.
> Consider the policies and procedures regarding authorization, safeguarding of transactions and their accountability. Adequate segregation of duties reduce the likelihood of errors (intentional or accidental) remaining undetected.
> Process flow diagrams to provide easy understandable representation of the flow of transactions through both manual and automated portions of the accounting function.
> Narrative outlining the sequential flow of documents and information.
> Core areas of concentration for application of standard procedures includes
• Management information System
• Periodical closing of financial statements
• Working capital management
• Capital expenditure proposal processing and capitalization of fixed assets.
• Broad Human resource policies and procedures