GEAR111
Study Unit 5: Information Technology
(IT) General andApplication Controls
Part 3: Application Controls 1
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Auditing Fundamentals, page 150-151
Classification of
computer controls:
❑ Accounting system: manual and computerised
❑ Risks in the IT environment
❑ Management’s response to risks
❑ Two broad categories in IT environment:
▪ General Controls
▪ Application controls
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Auditing Fundamentals, page 169
Application Controls
❑ Application = program performs task
❑ Manual and computerised controls
❑ Within a particular application (e.g., sales, debtors)
❑ Initiated, recorded, processing and output
❑ Provide reasonable assurance that recorded transactions are:
❑ Valid
❑ Accurate
❑ Complete
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Auditing Fundamentals, page 169
Application Controls
❑ Primary objective:
❑Toprevent, or detect and correct misstatements
arising when a transaction is:
❑ Input
❑ Processed
❑ Output generated
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Auditing Fundamentals, page 170-171
Application Controls
❑ Key components of applicationcontrols:
❑Input: Capturing, recording, initiation of information
❑Processingof data with computer
❑Distribution of outputs
Masterfile
❑Changes to Masterfile data. changes
Input Processing Output
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Auditing Fundamentals, page 171
Manual vs computer
controls
❑ Manual and computerised application controls:
❑ Independent manual controls
❑Example
❑ IT-dependent manual controls
❑Example
❑ Programmed (automated) controls
❑Example
❑ Table 5.2 in Auditing Fundamentals: Comparison between
control activities in manual and computerised environment
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Auditing Fundamentals, page 171
Input controls
❑ Ensure data entered (incl. Masterfile changes)
❑Valid, accurate, and complete
❑ Risks if not implemented?
❑ Accounting process:
Input Processing Output
Includes
Masterfile amendments
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Auditing Fundamentals, page 173
Input controls:
❑ Focuses on people using the information system
❑ User-related controls include:
❑ Training
❑ Dedicated employees
❑ Accountability
❑ User profiles
❑Username (user identification)
❑User authentication (passwords)
❑ Segregation of duties
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Auditing Fundamentals, page 174
Input controls:
❑ Controls build into the system and reflect on the screen
❑ Controls include:
❑ Screen-layout
❑ Document layout
❑ Standard and user friendly
❑ Minimum data to be captured
❑ Data echo test/closed-loop verification
❑ Prompt and user dialogue
❑ Compulsory fields
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Easy to
follow
Screen
layout
Standard
and user
friendly
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Minimum Standard and
data to be user friendly
captured
11
Data echo test / closed-loopverification
Standard and
user friendly
12
CompulsoryFields
Screen
dialogue
13
Input controls: Auditing Fundamentals, page 174
❑ Application controls that test the data entered against
pre-determined rules.
❑ Controls include:
❑Limit test (range check)
❑Field length test
❑Completeness test
❑Alpha-numeric tests / numeric character test
❑Sign check
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Completeness test
/ Mandatory fields
Field length test
15
Limit Test / Range check
Limit Test /
Range check
Alphabetic / alphanumeric /
numeric character tests
Homework:
❑ Complete the e-Fundi test & quiz (2023 GEAR111 - Study
unit 5 (test 3)) on the "GEAR111 assessments 2023" site
(DEADLINE - 21 March 2024 @ 23:00PM (evening)):
❑ Complete and submit the homework Assignment on the
"GEAR111 assessments 2023" site (DEADLINE - 21
March 2024 @ 23:00PM (evening)).
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West University, Raymond Cramer
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