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Narratives
A narrative is a written description of internal controls. Information is obtained similarly to the steps that
lead to the completion of ICQs — observation, inquiry, review of procedures manuals, and walk-throughs.
The transactions for each major accounting transaction-processing system are described, including the
initiation of the transaction, all processing that occurs, and the output of the transaction (that is, reports
and paper or electronic documents). It is important to note that the processing system could be either
manual or electronic. In addition, the controls surrounding the processing system should be documented,
including segregation of duties. Exhibit 8-3 contains an example of a narrative for a cash-receipts
processing system.
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