Application Controls

Question 1

misstatements in a batch computer system may not be detected quickly because?

Answer 1

time delays in processing transactions in a batch system since they are grouped together first and then processed

Question 2

The results of a programmed edit check of sales transactions would include a report showing exceptions and control totals for each batch processed.

Answer 2

true

Question 3

Edit Checks

Answer 3

ensure that only valid transactions are processed; hence the output would only ever be all rejected transactions

Question 4

Test Data

Answer 4

test the internal controls that prevent invalid employee I.D. numbers from being input.

Question 5

Validity check

Answer 5

check if data carries valid values; computer matches a control field value and highlights those that did not match

Question 6

Hash total

Answer 6

meaningless total computed to verify the accuracy and completeness of input so for ex) dpt numbers would be meaningless to calculate for payroll

Question 7

In a computerized payroll system environment what would an auditor lead likely use test data to test controls related to?

Answer 7

Test data involve the use of fictitious transactions to test whether application controls are functioning properly

They would be used to test controls related to missing employee numbers, time tickets with invalid job numbers, and agreement of hours per clock cards with hours on time tickets

Question 8

Three types of application controls

Answer 8

all 3 must be accurate and authorized

Input

Processing

Output-distribution

Question 9

Input

Answer 9

use preprinted forms to reduce mistakes
keypunch verification/duplication

“Control Totals”

1) Hash totals-not meaningful
2) Record Count- number of records involved
3) Batch Total- meaningful numerical totals

Logic Checks

1) Limit Tests: within a predetermined range (anything outside the range would be deemed as inappropriate)
2) Validity check- a legitimate code (M or F for gender)
3) Missing Data check- any omissions?
4) Check Digits-arithmetic manipulation (added on the end of the field)

Question 10

Processing

Answer 10

Checkpoint/Restart- go back to where you left off at
Limit on Processing Time- an upper limit
Internal and External Labels- to avoid mistakes

*same control totals as input

Question 11

Output

Answer 11

output limit- upper limit for printing time (or max number of pgs permitted)

*same control totals