In accounting techniques, sure controls are wanted to make sure that staff are doing their jobs correctly and be certain that the system runs correctly. These checks are in one of the best curiosity of the group. These controls come within the type of inner and exterior controls for the system. The interior controls are the checks which might be positioned within the system my the corporate’s personal administration and administrators. Immediately increasingly more corporations are shifting from the guide accounting techniques to computerized accounting data techniques. Some great benefits of a computerized system are will increase within the pace and accuracy of processing accounting data. Nonetheless, as techniques develop into computerized, the interior controls for that system must be tailored accordingly. It’s because computerized techniques convey with them sure distinctive issues that may solely be eliminated or minimized by adapting the current controls and including new controls. These issues are
· In a guide system there’s a paper path for the interior auditor to observe. All information and transactions are stored on paper and so an auditor has clear and documented proof of what has transpired. Computerized techniques not often have a transparent paper path to observe. Since computer systems do the entire sorting of the knowledge the corporate not often types the supply paperwork. Additionally the pc does many of the calculations and processing so there wouldn’t be the quantity of documentation that there can be in a guide system.
· One other downside of laptop techniques is the truth that there will be issue in figuring out who entered the information. In a guide system the id of the individual coming into the information will be recognized probably by the individual’s handwriting. This can’t be achieved in a computerized system. This makes it very troublesome to find out who’s answerable for errors or fraud.
· For the reason that computer systems do all calculations and processing errors can happen as a consequence of dangerous design of this system. This may be troublesome to detect particularly if the error doesn’t happen continuously and solely does so underneath specific circumstances.
· Laptop techniques additionally supply new alternatives for fraud. If a computerized system is just not arrange correctly and sure checks not put in then the pc system can be utilized to defraud the corporate. The truth that it’s troublesome to hint who enters the information solely provides to the magnitude of this.
So as to decrease the dangers of errors or fraud occurring within the laptop system sure controls must be put into place. These controls will be damaged up into three completely different classes. They’re
1. Administrative Controls
2. Techniques Growth Controls
three. Procedural Controls Administrative Controls
Administrative controls are these controls are these controls which might be positioned on the system to make sure the right group and processing of knowledge. These administrative controls are Division of duties.
Duties are assigned to completely different people within the group. That is achieved in such a manner that nobody individual can have full management over a transaction. This ensures that a person can’t have full management over the creation and working of the system. One motive for this division is having one individual controlling the system can lead to fraud if that individual is just not fully reliable. One more reason for the division of duties is to forestall the group from changing into completely depending on the individual controlling the pc system. If this individual have been to go away then the group would have nobody to run the system. The division of duties ensures that staff can depart with out having any main impact on the system.
Operation controls are crucial controls since they since they decide what the pc techniques and the staff utilizing the system have been doing. These controls can come within the type of
· rotation of shifts
· obligation logs
· a guide of working directions
· attendance controls
· laptop logs
These controls can enable an auditor to trace the precise actions of the pc techniques and staff. This documentation permits the to simply spot any errors or improper actions which have occurred. Recordsdata Controls
These controls are put in place to attenuate the variety of errors and omission that happen within the file system. Good file controls are
· Availability of a talented technician
· Correct procedures for issuing and returning recordsdata
· correct labeling and indexing of recordsdata
· safety of storage media from mud, humidity, fireplace and many others.
· Procedures for returning recordsdata for sure minimal durations
· Amenities for recovering recordsdata which have been broken or corrupted.
· Amenities for creating backup copies of recordsdata.
The position of those controls have very critical implications. These controls that data that’s very important to the group is secure. The information in these recordsdata have to be shielded from errors or tampering whether or not intentional or unintentional. Safety
The pc is just not solely vital to the processing of the knowledge however can be a beneficial mounted asset for the corporate. Due to this fact controls for the safety of the have to be put into place. Laptop have to be positioned in a safe space the place the entry to it’s restricted solely to those that want to make use of it. Sure ranges of safety should me maintained e.g. solely the techniques administrator can have entry to the CPU and storage techniques.
The pc system should even be positioned in a management atmosphere to guard it from environmental hazards e.g. mud and humidity. Preparations needs to be made to guard the pc towards fires and energy fluctuations. There must also be some controls in place to recuperate the system in case the fails. These controls would be certain that the breakdown of the wouldn’t have a critical impact on the corporate.
Techniques Growth controls
These are the controls which might be put over the design and implementation of the system. These controls be certain that the system is developed with a minimal variety of errors.
One vital management is standardization. These consist of assorted requirements which might be laid down by administration for the design and improvement of the system. These requirements embody the whole documentation of the event of the system. These requirements wouldn’t solely profit within the correcting of issues and updating of the system, the documentation would enable the auditor to get a greater thought of how the system works. This may assist the auditor in recognizing attainable issues within the system. Involvement of Administration
The involvement of the organizations administration within the improvement of the system is a vital management. With these controls, administration will need to have documentation resembling feasibility research, budgets and efficiency evaluations. These paperwork would enable administration to resolve if the system being developed can be viable and value efficient. With out such controls, costly initiatives will be began and by no means completed, costing the group an incredible deal in money and time. These managerial controls pressure the event crew to do a radical job since they’re accountable to administration.. Testing
Testing and trials are vital controls and require that techniques are completely examined earlier than they develop into operational. The intensive testing of applications will decrease and even get rid of the errors within the laptop system. The checks will present precisely what kind of issues happen within the system within the processing of sure information and would additionally point out any issues within the response time of the techniques. Additionally, the benchmarks which might be calculated in testing will be in contrast with benchmarks taken in a while to see if this system has been tampered with.
The coaching of the information processing employees is an important management. Correct coaching of employees would scale back the variety of errors that might happen within the system as a consequence of insufficient information of the system. The skilled employees can be much less prone to make errors. Concurrent Operating of outdated and new techniques.
Operating the outdated and new techniques concurrently can be an vital management. This management would enable the group to match the outcomes of the 2 techniques after they do completely different duties. These outcomes would enable them to search out any issues within the new system by validating the outcomes of the brand new system with the outcomes of the outdated one Procedural Controls.
Procedural controls are probably the most vital set of controls as they’re those which might be positioned on the day after day operating of the system. Procedural controls are notably efficient in detecting whether or not a system has been tampered with and so are efficient in detecting fraud. Procedural controls are divided into these controls positioned on enter, output, processing and storage.
These are procedural controls which might be positioned on the enter of knowledge into the system. These controls are
· Serial numbering of paperwork
· Validation checks on paperwork
· Batching paperwork and checking of batch totals
· authorization procedures
These controls are carried out by the person division. The Knowledge processing depart additionally then will get the information and put perform their very own controls.
· Vetting of batches to make sure that they’re right
· checks on information conversion strategies
These checks are made in order that the information that’s entered is as correct and as error free as attainable.
As soon as that information has been entered into the system and is being processed, the processing controls are used to make sure that the information is processed correctly.
Processing controls are divided into two classes. These are
1. Validation checks
2. File checks
The validation checks are made on the information when it’s being processed. These checks be certain that the information is processed accurately. Validation checks embody
· Examine digit verification
· Checks within the measurement of file and information
· examine on mode of the file
· Examine on consistency of fields in recordsdata
· Vary checks on numbers and values
· Hash totals
· Management file checks
· Sequence checks to make sure that information are entered in the best order
· Error logs which comprise a file of all errors which have occurred in the course of the processing of the information.
· Transaction logs which comprise a file of every transaction that has been made.
This offers an audit path for the auditor. The transaction log would comprise the place a selected transaction originated and who initiated it. File checks are the controls to make sure that the integrity of the recordsdata that maintain the information for the group stay intact throughout processing. Some file checks are
· Use of header tables to establish recordsdata
· Use of trailer labels to make sure that the file is totally learn.
· Arithmetic proof of the validation of sure fields by checking them
with different fields within the file Output controls
The outputting of processed information additionally has sure controls. These output controls are used to make sure the completeness, accuracy and timeliness of the output on display screen, printed kind in addition to on storage media. Some output management procedures are
· Preliminary screening of the output to detect apparent errors
· Output ought to solely be distributed by licensed individuals to licensed individuals.
· Controls totals on the output needs to be checked towards the management totals of the enter to make sure the consistency of knowledge.
· All of the paperwork produced needs to be numbered and accounted for
· Extremely delicate supplies shouldn’t be seen by the overall information processing employees however needs to be outputted to a safe location.
· A suggestions system have to be developed between the customers and the information processing division in order that any errors that happen can be reported and subsequently corrected.
When information is saved extra controls have to be put into place to make sure that the information is saved correctly and that the information is to tampered with in any manner. These controls be certain that no unauthorized individuals would have the ability to tamper with or destroy the information whether or not or not it’s deliberately or intentionally. A few of these controls are
· Authorization controls to make sure that solely licensed personnel is allowed to make amendments and deletions to the recordsdata.
· Controls to make sure that amendments and deletions are to be completely documented in order that the one who made the amendments will be made accountable for the adjustments they made.
· Controls to make sure that there are correct services for the backup of recordsdata. These embody guaranteeing that recordsdata are backed up recurrently, a number of backup recordsdata are stored and that these recordsdata are stored at a safe location and are simply retrievable in case of an emergency.
· Controls that might be certain that the information will be recovered in case of catastrophe. This contains transaction logs of full system dumps which is able to make periodic backups of all of the transactions that happen throughout the system.
Computerized accounting techniques convey with then a set of latest and distinctive issues. The interior controls which have been put into place for a guide system to assist the interior auditor can’t totally forestall or decrease the opportunity of errors or fraud that include the computerized techniques. Due to this fact the outdated controls have to be modified for the brand new system and new controls have to be put in. Solely then can the interior auditor be certain that the variety of errors that happen throughout the system be minimized and even eradicated..