In the context of a computer based accounting system, explain the meaning of the following terms:
i) Application controls (4 marks)
ii) General controls
a) General controls
These are controls, which relate to the environment within which computer-based accounting systems are developed, maintained and operated aimed at providing reasonable assurance that the overall objectives of internal controls are achieved. These controls could either be manual or programmed.
The objectives of general controls are to ensure proper development and implementation of applications and the integrity of program and data files and of computer operations. General controls will include:
a) Systems development controls
b) Organisational controls.
c) Access controls
d) Other controls
The objectives of application controls which may be manual or programmed are to ensure the completeness and accuracy of the accounting records and the validity of the entries made therein resulting from both manual and programmed processing. These relate to the transactions and standing data pertaining to each computer based accounting system and are therefore specific to each such application. With the increasing sophistication of computer operating systems it is becoming more common for controls to be programmed as part of each application. Application controls are generally divided into:
a) Input controls.
b) Processing controls.
c) Output controls.
d) Controls over master files and standing data.
e) Controls over standing data and master files