SU+6+IT+controls

SIJ6 - Application Controls Auditing Notes for South African Students. 13th edition: Chapter 9 (page 9/6 - 9/7; 9/11; 9/42; 9/48 - 9/52) Chapter 10 (page 10/40) Chapter 13 (page 13/27 - 13/28) Credit: Mrs. R van der Merwe.

Study Outcomes •Explain the differences between a computerised information system and a manual system; •Identify and describe the risks in a computerised environment; •Demonstrate a basic understanding of the computer technologies typically applied in the revenue and receipts cycle, the bank and cash cycle and the payroll and personnel cycle; •Describe how computer controls are classified; •Define the following concepts: General controls Application controls •Demonstrate a basic understanding of how application controls work as well as the different typ of application controls; •Describe specific input controls (user-related controls, documentation including request forms); •Recommend specific input controls (user-related controls, documentation, screen aids and logical programmed controls) by analysing practical scenarios / case studies of the revenue and receipts cycle, the bank and cash cycle and the payroll and personnel cycle; •Describe specific batch controls (user-related controls, documentation); and •Apply any of the above-mentioned in a case study.

[image] Manual information s stem AN 6/16, 9/42 - 9/48 Approval and authorisation: Levels of authorisation & manually signing as approval Segregation of duties: Incompatible duties performed by different employees Isolation of responsibility: Signatures (on document) Physical or logical access / custody controls: Protecting assets — control / restrict access, safeguarding Reconciliation: Identify, investigate, resolve differences (e.g. person) Verification: Comparing items, follow up on differences (e.g. person) Performance reviews: Reviewing for consistency and reasonableness in data (e.g. person) Documentation and records: Document design, stationery controls, chart of accounts.

Risks in a computerised environment Unauthorised Access (Data destruction) Loss of data or Inability to access data IJnauthorised changes - IT applications / environment AN 9/6 - 9/7 Unauthorised Access (Data changes) Failure to make changes • IT Inappropriate manual intervention IT personnel X privileges Unauthorised changes - Masterfiles.

Computer Technologies - Revenue & Receipts Entering orders, processing invoices, and recording receipts must be Valid (authorised), Accurate (correct values), and Complete (no missing transactions). AN 10/40 Debtors masterfile Ordering Warehouse — picking Person — access Warehouse despatch Debtors masterfile Credit management Online process — application / analytics Goods returned by customer Price masterfile Invoicing Manual Recording of sales En ering / processing — VAC Receipts / cashier FT's direct deposits n ering of credits — VAC Recording of receipts Entenng of receipts — VA.

Computer Technologies - Payroll & Personnel Employee timekeeping and payroll preparation must be Valid (only for actual employees), Accurate (correct salaries and deductions), and Complete (all hours worked are AN 13/27 - 13/28 recorded and paid correctly). Employee masterfile Personnel (HR) anual — tches / checking (input VAC) Person — access Timekeeping lectronic other syste Payment to employees EFT's rocessing controls Emp oyee masterfile Emp ee masterfile Payroll preparation Input / processing controls — VAC.

Control Objectives (Classification of application controls) Completeness (No omissions) Sequence test Field presence check Mandatory field check Validity (Occurred / Authorised) Logical access controls Validation check Limit check Data approval Check digit Shading of fields Dependence test Accuracy (Correct) Minimum keying in info Drop down lists Screen format Screen prompts Check digit Field size check Alpha-numeric test Numeric test Sign test Reasonableness check.

Classification of computer controls AN 9/11 & 9/42 Controls Overall Framework Computer Activities Application controls Specific task Cycles - accounting system Automated Set of procedures & programs - users with specific task Control - contributes to AC recording & processing of transactions that are V.

{3 Application Controls anua 9/42 utomate Batches Input Masterfile Processing Output.

Batch controls • Documents are grouped into batches • Control totals: • Financial totals (monetary amounts) • Hash totals (numeric fields - invoice number) - ONLY control total • Record counts (total # of records in batch) • Batch control sheet prepared & attached. Should contain: • Unique number • Control totals • Transaction type • Signature spaces • Batch register used to record physical movement (signed by recipient) - Clock cards or sales orders.

AN 9/48 - 9/50 Batches Batched in groups Control totals Batch control sheet Batch register Capturing / keying in S stem calculates & com Acce t/ re•ect Control totals "attached" financial total hash total record count movement si batch details record details ares uni ue batch number control totals identification of transaction s aces for si natures nature Input acce t— rocess re •ect — correct.

Batch controls ONE OF Su mary of batch controls - e.g. Sales orders Batch # Batch description Record # 1013-1062 Sales orders — Representative — 7-11 Decemb Ies orders — Representative — 14-18 December 2020 Record c nt 50 37 Delivered Sign - Rec ed Batch control sheet 1-10 Sales orders - *Representative* - 7-11 Dec Record count 1-10 1-12 50 Batch register [sequenced batch control sheet numbers, as well as numbers of orders] I) 2) 3) 4) 5) 6) 7) 8) [Securely attached to sales orders] Description IJnique batch # Details of batch [Transaction type] Control total [Number of orders] Control sheet securely attached to the sales orders batch Go in batch register Deliverer signs batch register Receiver signs batch register Sign batch register Sign batch register les representati mployee responsible for capturing sales rs].

Input controls - Screen aids 1. 2. 3. 4. 5. Minimum keying in of information • Account no. only, auto retrieve details • Drop-down lists Screen format • Look like hardcopy Screen dialogue/ screen prompts • Confirmation messages Mandatory fields • Not continue until all fields completed (*) Shading of fields • Will not react when clicked on/not changeable.

Input controls 2. 3. 4. Existence/Validity checks • Validation tests (An employee number or customer number exists) • Matching tests (Input information matched against data already in the database) • Data approval/authorisations tests (ID number will indicate whether alcohol sales can be made - older than 18) Reasonableness & limit checks • Limit checks (Customer's credit limit cannot be exceeded, normal hours per week not exceed 40) • Reasonableness checks (Normal, historical order qty is 100, qty entered is 1000, not reasonable) Dependency checks (Credit limit linked to credit rating) Format checks Alpha-numeric checks (Everything that is entered is numbers, or letters) Size checks (ID number not more than 13 digits, cell number not more than 10 digits) Mandatory field/missing data checks (Detect blanks where none should exist) Valid character & sign check (Positive numbers only in order quantity field) • Check digits (Extra character added to account or part number, by the application) Sequence checks (Detect gaps or duplications).

Auditing Notes page 9/50 - 9/52 Input Screen aids and related features Program checks Minimum keying in of information e.g., debtors account number Screen format- hardcopy MAF Screen dialogue and prompts Mandatory fields Shading of fields.

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Mandatory field/ missing data check Contact Errors! tossing required fie(d tassing required field Subject' Wssing required feld Ptease confirm that you ye not a sputbot' tossing required field Weeed) (teeed) Subject (reqWed} Mandatory fields Rease confirm that you are not a spambot C") I not a spunbot (teeed).

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FREE DELIVERY ON ALL ORDERS CNtR OSO EDGARS Ä FASHION Shopping Bag Thomas And Friends Fleece Set - Blue HOME ELECTRONICS BRANDS PROMOTIONS Minimum keying in of information R161.OO I Shading of fields R161.OO Order Summary Subtotal VAT (Included) Grand can 2161.00 R21.00 RIOI.OO ProceedtoSecureCheckout > Apply a discount code Free • Courier Ddiv•ry.

Input Auditing Notes page 9/51 Screen aids and related features Program checks - 9/52 Existence / validity checks Reasonableness & limit checks Dependency checks Format checks Sequence checks matching — e.g., validate debtors account nr@ masterfile data approval / authorisation — e.g., credit limit limit — e.g., cr limit / terms al ha-numeric size field size mandatory fielc missin data c.

How would you like to receive your order? Delivery to my Address OR Click & Collect Order Summary Cort SublOkil Shippütg Delivery - Toble Ra'e VAT (Included) Shading of fields RIOI.OO R65.OO R29.48 meose note we deliver your order too P.O. Box Or an incomplete delivery address. Screen dialogue and prompts R226.OO should we send your ordere Street Address Suburb City / Please select a region, state or province. Please provide your contact information First Name lost Name Mobile Number Continue to Payment Need Help' -1 your Yonsocticx•v is 100% secure. Alpha-numeric 0 0005 Postal Code Minimum keying in of information Alpha-numeric.

Sales Order Customer code: Customer PO nr: Customer details: Raymond Herholdt Vanderbijlpark 1911 Product code 3063320500 3001000506 3089053006 RAY024 210101/rh/04 Check digit Field presence check Validation test Field size check Mandatory field Billing address: PO Box 123456 nderbijlpark Date: Order nr: Number sequence test Ol-Jan-21 202101548 Account details: Minimum keyingin of information (Data retrieved from Masterfile) Shading offields Description NWU CA Student book set 2020/2021 Notepad - 100 pa es T525 la to Mandatory field Sign test Alphanumerictest Qua ity Unit price Type: Credit limit: balance: Remaining: Discount % Credit R 25 000.00 -R 2500.00 R 22 500.00 Li mit check Total price 1 15 1 R R 2 950.00 85.00 15 000.00 Check digit Field presence check Validation test Mandatory field Minimum keying in of information ( Data retrieved from Masterfile) Shading of fields Subtotal VAT@ 15% Total Re asonableness checks R R R R R R 2 950.00 1 275.00 15 000.00 19 225.00 2 883.75 22 108.75.

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TEST COLLECTION TIME. Rubber stamp with text test results inside, illustration Stock Photo - Alamy.