and helps prevent two common

errors:
3. Supervision. A compensating control in
small organizations for sufficient
segregation o duties; a control activity
involving the critical oversight of
employees
4. Accounting Records. Consist of source
documents, journals, and ledgers which
capture economic essence and provide
an audit trail
5. Access Control. Ensure that only
authorized personnel have access to the
firm’s assets.
6. Independent Verification Procedures.
Independent checks of the accounting
system to identify eros and
misinterpretations.
a. Management can assess
indiidual performance
b. System Integirity
c. Data correctness which
includes:
i. Reconciling batch totals
during transaction
processing.
ii. Comparing physical
assets with accounting
records.
iii. Reconciling subsidiary
accounts with control
accounts.
iv. Reviewing management
reports that summarize
business activities.
IT Application Controls
1. Input. Programmed procedures, often
called edits, that perform tests on
transaction data to ensure that they
are free from errors.
a. Check Digit. Method for
detecting data coding errors in
which a control digit is added
to the code when it is originally
designed to allow the integrity
of the code to be established
during subsequent processing
i. Transcription Errors.
Occurs when (1) extra
digits are added to the
code, (2) a digit is
omitted from a code, or
(3) a digit is recorded
incorrectly
ii. Transposition Errors.
Occur when digits are
reversed.
b. Missing Data Check. Identifies
blank or incomplete input fields.
c. Numeric-Alphabetic.
Check/identify data in the
wrong form. (E.g. Password
making)
d. Range Checks. Verify that all
amounts fall within an
acceptable range. (E.g.
Authorized limit/range)
e. Reasonableness Check Verify
that amounts that have based
limit and range checks are
reasonable.
f. Validity Checks. Compare
actual fields against acceptable
values.
2. Processing. Programmed procedures to
ensure an application’s logic is
functioning properly.
a. Batch Controls. Manage the
flow of high volume
transactions and reconcile
system output with original
input.
Control total = Running balance/Amount nung
pinrocess
b. Run-to-Run Controls. Controls
that use batch figures to
monitor the batch as it moves
from one programmed
procedure to another. (E.g.
Processing usually takes 3
minutes, but now it suddenly
became 3.5 minutes, dapat
ma-monitor ito ng IT and
investigate why so)
c. Hash Total. Summation of
nonfinancial data field to keep
track of the records in a batch.

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 (E..g. Pag-add niya ng data, File. Each record in a direct
transaction code, etc.) access file is assigned a unique
d. Audit Trail Controls. Ensures disk location or address that is
every transaction can be traced determined by its primary key
through each stage to value.
processing from its economic
sources to its presentation in
the financial statements. (E.g.
Validation of Balance Sheet
amounts in the checking
accounts/GL)
i. Transaction Log
h. Destructive Update Approach.
Leaves no backup copy and
requires a special recovery
program if data is destroyed or
corrupted.

e. Master File Backup Controls.

Ensures every transaction can
be traced through each stage
to processing from its economic
i. Backup of Masterfile in a
source to its presentation in the
Real Time System. Real-time
financial statements. The
systems pose a more difficult
systems designer determines
problem because transactions
the number of backup master
are being processed
files needed for each
continuously. Backup
application. Two factors
procedures are scheduled at
influence this decision:
pre-specified intervals
i. Financial Significance
throughout the day. (E.g. Fast
of the System
Food chains backup their
ii. Degree of File Activity
systems every 30 minutes.)
f. Grandfather-Father-Son
(GFS). A back-up technique
employed by systems that use
sequential master files (whether
tape or disk). An integral part
of the master file update
process.
3. Output Procedures to ensure output is
not lost, misdirected, or corrupted and
that privacy is not violated. Proper
access and backup procedures must be
in place to protect these files. (E.g.
Hardcopy output)
a. Controlling Hard Copy
Output
i. Output Spooling.
Spooling is directing an
application’s output to
a magnetic disk file
rather than to printer
g. Backup Process in Batch directly. (E.g. Standby,
System using Direct Access

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