This is a complete and exhaustive description of the system as found in operation by the auditor. Actual testing and observation are necessary before such a record can be developed. It may be recommended in cases where no formal control system is in operation and would be more suited to small business.
The basic disadvantages of narrative records are :
- To comprehend the system in operation is quite difficult.
- To identify weaknesses or gaps in the system
- To incorporate charges arising on account of reshuffling of manpower, etc.
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