Question 3 Identify and describe a minimum of four internal controls in a computer lab classroom. Required Classify each...

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Accounting

Question 3
Identify and describe a minimum of four internal controls in acomputer lab classroom.
Required
Classify each control as being preventive, corrective and/ordetective. If the control is an information technology control,also classify the control as a general or application control.
Describe the risk(s) each control is intended to address.
Describe the operation of each control.
Identify and discuss a potential deficiency in at least one ofthe controls you have identified.

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Internal controls over computer processing include both manual procedures and procedures built into the computer programs These controls can be divided into General controls Application controls General controls These are controls which relate to the environment within which computerbased 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 be considered under the headings of Systems development controls Organisational controls Access controls Other controls Systems development controls These relate to Review testing and approval of new systems Parallel running Program changes Documentation procedures Review testing and approval of new systems The basic principles of these controls are that Systems design should include representatives of user department accounting department and internal audit Each proposed system should have written specifications that are approved by management and user department Systems testing should involve both user and computer department The computer manager the user department dbase administrator and the appropriate level of management should give final approval to the new system before it is placed under operation and offer reviewing the completeness of documentation and results of testing Program Changes Similar requirement apply to changes as well as to new systems although the level of testing and authorisation will vary with the magnitude of changes It is particularly important that the documentation be brought up to date A common cause of control breakdown is the unsuspecting reliance of new staff on out of date documents Documentation Procedures Adequate documentation is important to both the auditor and management For management documentation provides a basis for Reviewing the system prior to authorisation Implementing smooth personal changes and avoiding the problem that key employees might take with them all the knowledge on how the system works Reviewing existing systems and programmes For the auditor documentation is necessary for preliminary evaluation of the system and its control Parallel running Before switching to the new system the whole system should be tested by running it parallel with the existing system Parallel running refers to running the new and old system along each other for a specified period of time say month This is important because It provides the users with the opportunity to familiarise themselves with the new system while still having the old system available to compare Provides for an opportunity for the programmers to sort out any problems with the new system Organisational controls These relate to Segregation of functions Policies and procedures relating to control functions Segregation of functions The principal segregation in See Answer

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