Why do auditors usually evaluate general controls before evaluating transaction-level application controls? Discuss.

Expert Solution

General control includes all such control that ensures the authenticity of the data or transactions and such controls covers almost the entire gamut of the organization like internal accounting control, IT security control, operational and administration control and all such controls to ensure that adequate safeguards are maintained over access of documents and records including IT resources.

The first step that an auditor undertakes before starting an audit is to ensure that proper general control is in place. If the auditor is satisfied with the control system, then the auditor shall proceed further and the next step will be evaluating the transaction level application control.

The application control ensures that the input fed is authorized, reliable and recorded in the manner intended and the processing is done thereon completely and accurately so that the output obtained is true and correct and meet the expectation. That’s why application control are control over IPO i.e.. Input, processing and output functions.

Conclusion: By carrying evaluating general control the auditor makes sure that only correct input is fed. If input fed is correct, the output will be correct. If the general control is not adequate, there is a possibility that input data may get manipulated in its handling or if the input is wrongly coded, the computer will read the input wrongly.

ekkarill92 answered 2 years ago

Are narratives, flowcharts and checklists useful for both general controls (company-level controls) and transaction controls?

What is Application Controls for Transaction Processing

Briefly define general controls and application controls.

27. Distinguish between ‘General controls’ and ‘Application controls’ in a computerized environment.

"Explain why economists usually oppose controls on prices"

"Explain why economists usually oppose controls on prices

1.Explain the importance of internal controls to auditors and management. 2.How do auditors gain an understanding...

1.Explain the importance of internal controls to auditors and management. 2.How do auditors gain an understanding of an entity's internal control?

course : Accounting information system GITC/Application Controls 1. GITC, general information technology controls is control activities...

course : Accounting information system GITC/Application Controls 1. GITC, general information technology controls is control activities performed by management to ensure the ongoing effectiveness of the organization's automated application controls and related systems. Where as application controls help ensure that transactions occured are recorded completely and accurately. Application controls also are automated in nature and often apply to the processing of individual transactions. Also, GITC includes execution of policies and procedures that relate to financially relevant applications and support the...

distinguish between the various service organization controls (SOC) reporting options available to auditors who evaluate cloud...

distinguish between the various service organization controls (SOC) reporting options available to auditors who evaluate cloud computing service providers.

What are application controls? Pick a few of these and discuss a few examples of what...

What are application controls? Pick a few of these and discuss a few examples of what might be a good IT control for a company to put in place.

Question