Computerized accounting/financial systems still need internal controls to enhance the integrity of such systems. Explain four internal control procedures that need to be put in place to guarantee the integrity of such systems.

CPA-Quantitative-Analysis-Section-4 BLOCK RELEASE

Internal control procedures:
1. Manual recalculations- a sample of transactions may be recalculated manually to ensure that processing is accomplishing the anticipated task.
2. Editing- an edit check is a program instruction or a subroutine that tests for accurate,complete and valid input and updates in an application.
3. Programmed controls- software can be used to detect and initiate corrective action for errors in data and processing. For example, if the incorrect file or file version is provided for processing, the application program could display messages instructing that the proper file and version be used.
4. Exception reporting– an exception report is generated a program that identifies transactions or data that appear to be incorrect. These items may be outside a predetermined range or may not conform to specified criteria.
5. Sequence checking on data inputs- any control number out of sequence or duplicated are rejected or noted on an exception report for follow-up purposes.
6. Range checking on data inputs-this ensures that data is entered correctly and agrees with valid predetermined criteria. For example, a valid transaction code must be entered in the transaction field.
7. Key verification on data inputs- the keying-in process is repeated a separate individual using a machine that compares original keystrokes to the repeated keyed input. For example, a worker‘s number can be keyed in twice to verify the keying process.

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