LESS O N 8

APPLIC AT ION
CONT RO LS
APPLICATION
CONTROLS
Application controls are the steps
organizations can implement within
their applications to keep them private
and secure. Though applications are an
inevitable and vital part of the daily
operations of modern organizations,
they also put organizations at an
unprecedented risk of breach.
APPLICATION
CONTROLS
These are concerned with the accuracy,
completeness, validity, and authorization
of the data captured, entered, processed,
stored, transmitted, and reported.

Application controls are likely to be

effective when general controls are
effective. Application controls are used
specifically in accounting applications to
control inputs, processing, and outputs.
CATEGORIES OF
APPLICATION CONTROL
INPUT CONTROLS

PROCESSING
CONTROLS

OUTPUT
CONTROLS
 This application control
governs the data inputs in an

INPUT
application. Input controls
prevent users from entering

CONTROLS
unvalidated information into
the system. These controls
might require data to be
entered in a given format or
authorization on all inputs
before adding them to the
information system.
4 TYPES OF INPUT CONTROLS
STANDARD
SOURCE PROCEDURES FOR
DOCUMENTS DATA PREPARATION
CONTROLS AND ERROR
HANDLING

CONTROL TOTALS
PROGRAMMED
AND
EDIT CHECKS
RECONCILIATIONS
SOURCE is the paper form used to

DOCUMENTS capture and record the original

data of an accounting

CONTROLS transaction
 3 SOURCE DOCUMENTS CONTROLS
FORM DESIGN

Both the source document and the

input screen should be well designed
so that they are easy to understand
FORM AUTHORIZATION AND
and use, logically organized into groups CONTROL
of related data.
The source document should
Source documents should have clear
contain an area for authorization by
and direct instructions embedded into
the appropriate manager.
the form. RETENTION AND SOURCE
The source document forms should DOCUMENTS
The source document design and input
be prenumbered and used in
screen design should match each After data from source documents
sequence. Prenumbering allows for
other. has been keyed into the computer,
ongoing monitoring and control
the source documents should be
over blank source documents.
retained and filed in a manner that
allows for easy retrieval.
STANDARD
Data preparation - procedures

PROCEDURES to collect and prepare source

documents

FOR DATA Employees should be sufficient

knowledge on:

PREPARATION
a. which form to use
b. how to complete form
c. which department to send the

AND ERROR form after it is completed

HANDLING
STANDARD Error handling - The source

PROCEDURES
document should contain an
area for authorization by the
appropriate manager.

FOR DATA The error log should be regularly

reviewed by an appropriate

PREPARATION manager so that

action can be taken on a timely
corrective

AND ERROR
basis. Corrective action might
require more training for
employees, better form design

HANDLING or better
procedures.
data collection
PROGRAMMED EDIT CHECKS
FIELD VALIDITY LIMIT
CHECKS CHECK CHECK

RANGE REASONABLENESS COMPLETENESS

CHECK CHECK CHECK

SIGN SEQUENCE SELF -CHECKING

CHECK CHECK DIGIT
CONTROLS Control totals are subtotals of

TOTALS AND
selected fields for an entire
batch of transactions.

RECONCILIATIONS
 3 CONTROL TOTALS AND RECONCILIATIONS
RECORD COUNTS

Simple count of number of records

proceesed. BATCH (FINANCIAL) TOTALS
The records can be counted prior to
totals of financial data, such as total
and after input, and the totals should
gross pay or total tax deducted.
agree HASH TOTALS
•Both batch and hash totals are
subtotals of certain fields. totals of fields that have no
apparent logical reason to be
added.

Record count: 3
Batch total: 40,000
Record count: 3 Hash total: 426
Hash total: 11,847
PROCESSING
prevent, detect, and/or correct
errors while data processing
(batch or online) takes place.

CONTROLS These controls help ensure that

the data are accurately and
completely processed through
the application
 It is important to ensure that
the application software has

PROCESSING
no errors.
To ensure data accuracy and
completeness

CONTROLS Designed properly, balancing

totals for transaction count
and amount can detect
missing or duplicate
transactions.
 PROCESSING CONTROLS

DATA FILE CROSS-

MATCHING LABELS FOOTING
 to ensure the accuracy and
completeness of the output,
and to properly manage the

OUTPUT
safekeeping of output
reports to ascertain that
security and confidentiality of

CONTROLS the information

maintained.
is

To ensure accuracy and

complete- ness, the output
can be reconciled to control
totals
 Output reports contain data
that should not fall into the
wrong hands, as much of the
information is confidential or

OUTPUT proprietary.
organization
Therefore,
must
an
maintain

CONTROLS
procedures to protect output
from unauthorized access, in
the form of written guidelines
and procedures for output
distribution. In the case of
sensitive data, the procedures
might include a requirement
that users sign off on the
receipt of outputs.
TH ANK
YOU