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- This topic has 6 replies, 2 voices, and was last updated 5 years ago by cindy1228.
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- March 2, 2019 at 6:11 am #507084
Hi. I hope you could help me clear up my understanding.
Will application control also corresponds to test of control?
March 2, 2019 at 7:59 am #507094Not entirely sure what you are asking – but I think not.
Application controls (also general IT controls) are examples of control activities – see s.3 of Chapter 12. Control activities – which also include segregation of duties, authorisation, etc are MANAGEMENT’s policies and procedures.Tests of control are AUDIT procedures.
If you look at Chapter 15, the operating effectiveness of controls in a computer system may be tested using “test data” – this is a test of control. Audit software/programs are used for tests of details/analytical procedures (i.e. substantively).
The auditor will plan to use test data and reduce substantive procedures or take a fully substantive approach as per the overview (Chapter 8).
March 2, 2019 at 8:16 am #507100But can application controls be tested to assess its effectiveness?
March 2, 2019 at 9:07 am #507118Absolutely – consider the examples of edit checks as controls over input in Chapter 14. The auditor could process test data (see 1.2 in Chapter 15) which includes invalid dates (e.g. 29-Feb-2019), invalid account numbers (e.g. 5 or 7 digits rather than 6), etc. The application controls should either reject the input (so that it has to be corrected and re-input) or process it (if that is possible) but report it “by exception” as an error (for investigation and correction). If the test data results are as the auditor predicts (i.e. “good” data is processed and processing of “bad” data is prevented (i.e. rejected) or detected and corrected (i.e. reported and followed up), the controls are operating effectively.
March 2, 2019 at 11:32 am #507179Got it. Thank you! AA on Monday.
March 2, 2019 at 12:27 pm #507181I hope you have found time to attempt our exam style and standard Section A Mock Exam https://opentuition.com/acca/aa/acca-aa-revision-mock-exam/
March 2, 2019 at 12:54 pm #507183Yes. I did. Thank you.
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