Input and Origination Controls

Question 1

** Describe the most important application controls (input controls)

Answer 1

4 objectives of input controls

1) ensure they are valid
2) completeness
3) accuracy
4) efficiency

Question 2

3 categories of application controls

Answer 2

1) Input and origination controls - control over data entry and data origination process
2) processing and file controls - processing and files, including master file updates
3) output controls - production of reports

Processing methodology (batch processing vs. online, real-time processing) can impact the selection of application controls as not all controls work with batch and online, real-time processing systems.

Question 3

Input controls

Answer 3

Programmed controls, edit checks, or automated controls

Ensure transactions entered into system meet following control objectives:

1) valid
2) complete
3) accurate

There are more input than processing controls; it is best to not have a manual input process hence name origination to replace input

Question 4

Important input controls

Answer 4

1)missing data check - checks to see if something entered into field
2) field check - verifies data entered is an acceptable type
3) limit test - checks to see field does not exceed specified value:
A) range test - validate user and lower limits
B) sign tests
4) valid code test - checks to see each account code entered into system is an existing code…checks if it merely exists (REFERENTIAL INTEGRITY)
5)Check digit - valid and correct account code - number created by arithmetic algorithm to digits of a number - single digit append to code
6) reasonableness check (logic test) - checks to see the data in 2 more fields consistent
7) sequence check
8) key verification - re-keying of critical data followed by a comparison of two keying. Key verification is generally found in batch systems, but can be used in online real-time environments as well. As a second example, consider the process required to change a password: enter the old password, enter the new password, and then re-enter (i.e., key verify) the new password

Closed loop verification - ensures a valid an correct account code was entered - AVAILABLE ONLY IN ONLINE REALTIME SYSTEMS***

Batch control totals - Manually calculated totals of various files of the documents in a batch.

A) Financial totals - Totals of currency field that result in meaningful totals, such as $ amounts of checks
B)Hash totals - totals of a field, usually an account code field, for which the total has no logical meaning, such as total of customer account numbers in a batch of invoices
C)Record counts - count of the number of documents in a batch or # of lines on the documents in a batch

a.
Financial totals – Totals of a currency field that result in meaningful totals, such as the dollar amounts of checks. (Note that the total of the hourly rates of pay for all employees, for example, is not a financial total because the summation has no accounting-system meaning.)
b.
Hash totals – Totals of a field, usually an account code field, for which the total has no logical meaning, such as a total of customer account numbers in a batch of invoices.
c.
Record counts – Count of the number of documents in a batch or the number of lines on the documents in a batch.
11.
Preprinted forms and preformatted screens – Reduce the likelihood of data entry errors by organizing input data logically: when the position and alignment of data fields on a data entry screens matches the organization of the fields on the source document, data entry is faster, and there are fewer errors.
12.
Default values – Presupplied data values for a field when that value can be reasonably predicted; for example, when entering sales data, the sales order date is usually the current date; fields using default values generate fewer errors than other fields.
13.
Automated data capture – Use of automated equipment such as bar code scanners to reduce the amount of manual data entry; reducing human involvement reduces the number of errors in the system.