Internal Control in Respect of Services

The provision of service also constitutes trading, e.g., those rendered by a contractor, estate agent, repairer of motorcars, etc. In those cases, the internal check should provide for the regulation of the charges for the services rendered, either according to an agreement entered into with the parties, to whom the services have been provided, or on the basis of costs incurred in providing the service, a
record in respect whereof is maintained. For instance, the charge for a construction job should be regulated according to the agreement entered into with the party; and in case any subsequent modification has been made therein, involving additional work, the charge should be modified accordingly. A motor repairing workshop or an estate agency office should regulate its charges according to the time taken and the expenses incurred in rendering the services. Similarly, a solicitor should charge for the specific item of work handled for the client. A record of work done should be maintained in the time sheets or in diaries which should be posted regularly, to obviate the possibility of the client being undercharged. It is the duty of the auditor to verify that an appropriate internal check exists in respect of different types of transactions entered into by the client to ensure that all the income receivable has been properly accounted for and adequate precautions have been taken to control expenses

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