Accounting Procedure Controls

In accounting methods, certain controls are essential to assure that staff members are performing their work opportunities properly and assure that the procedure runs properly. These checks are in the best interest of the business. These controls arrive in the variety of inside and exterior controls for the procedure. The inside controls are the checks that are positioned in the procedure my the firm’s have administration and administrators. Now much more and much more corporations are shifting from the handbook accounting methods to computerized accounting facts methods. The benefits of a computerized procedure are raises in the speed and accuracy of processing accounting  facts. Nonetheless, as methods become computerized, the inside controls for that procedure has to be tailored appropriately. This is since computerized methods bring with them certain unique challenges that can only be taken off or minimized  by  adapting the existing controls and including new controls. These challenges are

· In a handbook procedure there is a paper trail for the inside auditor to observe. All records and transactions are stored on paper and so an auditor has apparent and documented evidence of what has transpired. Computerized methods rarely have a apparent paper trail to observe. Considering the fact that personal computers do all of the sorting of the facts the corporation rarely kinds the resource paperwork. Also the personal computer does most of the calculations and processing so there would not be the amount of documentation that there would be in a handbook procedure.

· Another problem of personal computer methods is the point that there can be issue in figuring out who entered the facts. In a handbook procedure the identification of the individual entering the facts can be discovered potentially by the person’s handwriting.  This are not able to be accomplished in a computerized procedure. This makes it quite hard to ascertain who is dependable for problems or fraud.

· Considering the fact that the personal computers do all calculations and processing problems can happen owing to undesirable layout of the application. This can be hard to detect particularly if the mistake does not happen routinely and only does so less than particular ailments.

· Personal computer methods also offer you new possibilities for fraud. If a computerized procedure is not established up properly and certain checks not put in then the personal computer procedure can be used to defraud the corporation. The point that it is hard to trace who enters the facts only adds to the magnitude of this.

In order to lessen the challenges of problems or fraud taking place in the personal computer system  certain controls have to be put into spot. These controls can be broken up into 3 unique groups. They are

one.  Administrative Controls

2.  Techniques Development Controls

3.  Procedural Controls   Administrative Controls

Administrative controls are all those controls are all those controls that are positioned on the procedure to assure the right business and processing of facts. These administrative controls are   Division of duties.

Obligations are assigned to unique folks in the business. This is accomplished in this sort of a way that no one particular individual can have total regulate more than a transaction. This makes certain that an particular person are not able to have total regulate more than the creation and running of the procedure. One particular rationale for this division is having one particular individual managing the procedure can end result in fraud if that individual is not totally honest.  Another rationale for the division of duties is to avoid the business from turning into thoroughly dependent on the individual managing the personal computer procedure. If this individual ended up to go away then the business would have no one particular to operate the procedure. The division of duties makes certain that staff members can go away without having any important effect on the procedure.

Procedure Controls

Procedure controls are vital controls considering that they considering that they ascertain what the personal computer methods and the staff members utilizing the procedure have been performing. These controls can arrive in the variety of

· rotation of shifts

· duty logs

· a handbook of running instructions

· attendance controls

· personal computer logs

These controls can make it possible for an auditor to track the exact actions of the personal computer methods and staff members. This documentation lets the to very easily place any problems or poor actions that have happened.   Data files Controls

These controls are put in spot to lessen the amount of problems and omission that happen in the file procedure. Superior file controls are

· Availability of a qualified technician

· Suitable methods for issuing and returning documents

· right labeling and indexing of documents

· security of storage media from dust, humidity, fire and so forth.

· Strategies for returning documents for certain least durations

· Amenities for recovering documents that have been destroyed or corrupted.

· Amenities for producing backup copies of documents.

The placement of these controls have quite really serious implications. These controls that facts that is very important to the business is safe. The facts in these documents should be guarded from problems or tampering regardless of whether intentional or accidental.   Components Stability

The personal computer components is not only crucial to the processing of the facts but is also a valuable fixed asset for the corporation. For that reason controls for the security of the components should be put into spot. Personal computer components should be positioned in a secure region exactly where the entry to it is restricted only to all those who will need to use it. Specific amounts of stability should me managed e.g. only the methods administrator can have entry to the CPU and storage methods.

The personal computer procedure should also be positioned in a regulate atmosphere to shield it from environmental dangers e.g. dust and humidity. Preparations must be built to shield the personal computer towards fires and ability fluctuations. There must also be some controls in spot to recuperate the procedure in case the components fails. These controls would assure that the breakdown of the components would not have a really serious effect on the corporation.

Techniques Development controls

These are the controls that are put more than the layout and implementation of the procedure.  These controls assure that the procedure is created with a least amount of problems.


One particular crucial regulate is standardization. These consist of various criteria that are laid down by administration for the layout and development of the procedure. These criteria contain the finish documentation of the development of the procedure. These criteria would not only benefit in the correcting of challenges and updating of the procedure, the documentation would make it possible for the auditor to get a far better plan of how the procedure will work. This would assistance the auditor in recognizing doable challenges in the procedure.   Involvement of Management

The involvement of the businesses administration in the development of the procedure is an crucial regulate. With these controls, administration should have documentation this sort of as feasibility research, budgets and overall performance evaluations. These paperwork would make it possible for administration to choose if the procedure getting created would be viable and value productive. With out this sort of controls, pricey jobs can be commenced and never completed, costing the business a excellent offer in time and funds.  These managerial controls force the development group to do a thorough position considering that they are accountable to administration..   Tests

Tests and trials are crucial controls and need that methods are thoroughly analyzed prior to they become operational. The comprehensive screening of systems will lessen or even eliminate the problems in the personal computer procedure.  The tests will exhibit specifically what kind of challenges happen in the procedure in the processing of certain facts and would also point out any challenges in the response time of the methods. Also, the benchmarks that are calculated in screening can be in contrast with benchmarks taken later on on to see if the application has been tampered with.


The instruction of the facts processing personnel is a quite crucial regulate. Suitable instruction of personnel would decrease the amount of problems that would happen in the procedure owing to inadequate knowledge of the procedure. The trained   personnel would be less very likely to make mistakes.   Concurrent Jogging of aged and new methods.

Jogging the aged and new methods concurrently is also an crucial regulate. This regulate would make it possible for the business to assess the final results of the two methods when they do unique tasks. These final results would make it possible for them to come across any challenges in the new procedure by validating the final results of the new procedure with the final results of the aged one particular   Procedural Controls.

Procedural controls are one particular of the most crucial established of controls as they are the ones that are positioned on the day to day operating of the procedure. Procedural controls are particularly productive in detecting regardless of whether a procedure has been tampered with and so are productive in detecting fraud. Procedural controls are divided into all those controls positioned on input, output, processing and storage.

Enter Controls

These are procedural controls that are positioned on the input of facts into the procedure.  These controls are

· Serial numbering of paperwork

· Validation checks on paperwork

· Batching paperwork and examining of batch totals

· authorization methods

These controls are carried out by the consumer division. The Knowledge processing depart also then will get the facts and put have out their have controls.

These are

· Vetting of batches to assure that they are proper

· checks on facts conversion procedures

These checks are built so that the facts that is entered is as accurate and as mistake free of charge as doable.

Processing Controls

Once that facts has been entered into the procedure and is getting processed, the processing controls are used to assure that the facts is processed properly.

Processing controls are divided into two groups. These are

one.  Validation tests

2.  File checks

The validation checks are built on the facts when it is getting processed. These checks assure that the facts is processed the right way. Validation checks contain

· Check out digit verification

· Checks in the sizing of file and records

· check out on manner of the file

· Check out on regularity of fields in documents

· Range tests on numbers and values

· Hash totals

· Regulate history checks

· Sequence checks to assure that records are entered in the correct order

· Mistake logs which contain a history of all problems that have occurred  through the processing of the facts.

· Transaction logs which contain a history of every single transaction that has been built.

This provides an audit trail for the auditor. The transaction log would contain exactly where a particular transaction originated and who initiated it.   File checks are the controls to assure that the integrity of the documents that maintain the facts for the business keep on being intact through processing. Some file checks are

· Use of header tables to detect documents

· Use of trailer labels to assure that the history is totally go through.

· Arithmetic evidence of the validation of certain fields by examining them

with other fields in the history   Output controls

The outputting of processed facts also has certain controls. These output controls are used to assure the completeness, accuracy and timeliness of the output on display, printed variety as very well as on storage media. Some output regulate methods are

· Preliminary screening of the output to detect apparent problems

· Output must only be distributed by approved persons to authorized   persons.

· Controls totals on the output must be checked towards the regulate totals of the input to assure the regularity of facts.

· All the paperwork generated must be numbered and accounted for

· Extremely sensitive materials must not be found by the normal facts processing personnel but must be outputted to a secure spot.

· A comments procedure should be created among the consumers and the facts           processing division so that any problems that happen would be described and           subsequently corrected.

Storage Controls

When facts is saved further controls should be put into spot to assure that the facts is saved properly and that the facts is to tampered with in any way.  These controls assure that no unauthorized persons would be able to tamper with or wipe out the facts regardless of whether it be deliberately or deliberately. Some of these controls are

· Authorization controls to assure that only approved personnel is           permitted to make amendments and deletions to the documents.

· Controls to assure that amendments and deletions are to be thoroughly           documented so that the individual who built the amendments can be built accountable           for the modifications they built.

· Controls to assure that there are right amenities for the backup of           documents. These contain ensuring that documents are backed up on a regular basis, many           backup documents are stored and that these documents are stored at a secure spot and are           very easily retrievable in case of an unexpected emergency.

· Controls that would assure that the facts can be recovered in case of           disaster. This incorporates transaction logs of finish procedure dumps which will make periodic backups of all the transactions that happen within just the procedure.

Computerized accounting methods bring with then a established of new and unique challenges. The inside controls that have been put into spot for a handbook procedure to assistance the inside auditor are not able to thoroughly avoid or lessen the chance of problems or fraud that arrive with the computerized methods. For that reason the aged controls should be modified for the new procedure and new controls should be put in. Only then can the inside auditor assure that the amount of problems that happen within just the procedure be minimized or even eliminated..