Thanks to visit codestin.com
Credit goes to www.scribd.com

Scribd
Upload
114 views1 page

Application Controls for Insurers

The internal auditor of Mazvita Insurance Brokers discovered issues with the company's IT system through a recent audit. The IT system was missing or misallocating some client transactions, while the manual files contained correct information. Transactions recorded in interim financial statements from the IT system lacked supporting documents and details. Some debit notes were also not fully recorded in the IT system for the entire year. Additionally, some client files in the IT system were marked as closed when those clients still had active policies.

Uploaded by

fortunate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
114 views1 page

Application Controls for Insurers

The internal auditor of Mazvita Insurance Brokers discovered issues with the company's IT system through a recent audit. The IT system was missing or misallocating some client transactions, while the manual files contained correct information. Transactions recorded in interim financial statements from the IT system lacked supporting documents and details. Some debit notes were also not fully recorded in the IT system for the entire year. Additionally, some client files in the IT system were marked as closed when those clients still had active policies.

Uploaded by

fortunate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

You are the Internal Auditor of Mazvita Insurance Brokers Private Limited which is receiving

bad publicity due to numerous claims and penalties from insurers and the general public. Your
recent audit revealed that;
-The IT system has some of the client’s transactions missing or misallocated.
-The manual files and records have all the correct information.
-Transactions recorded as other expenses and other revenues in the interim Financial
Statements produced from the IT system had no supporting documents as well as not fully
detailed.
-Some debit notes were not fully recorded on the computer system for the whole year.
-Some of the clients’ files on IT system were already classified as closed whilst the clients had
policies still functional.
Required: Discuss the application controls that the company could operate to ensure the
validity, completeness and accuracy of transactions. [Total 25 marks]

ANSWER
Over the past decades, organizations around the world have spent billions of dollars
upgrading or installing new business application systems for different reasons, ranging from
tactical goals, such as year 2000 compliance, to strategic activities, such as using technology
as an enabler of company differentiation in the marketplace. Computer systems are controlled
by a combination of general controls and application controls.
Definition of key terms
Application controls
Application controls are defined as manual or automated procedures that typically operate at
a business process level and apply to the processing of transactions by individual
applications. Application controls can be preventative or detective in nature and are designed
to ensure the integrity of the accounting record. Accordingly, application controls relate to
procedures used to initiate, record, process and report transactions or other financial data.
These controls help ensure that transactions occurred, are authorised and are completely and
accurately recorded and processed (ISA 315 (Redrafted). : Application controls are
specific to each application and relate to the transactions and data pertaining to each
computer-based application system. The objectives of application controls are to ensure
the completeness and accuracy of records and the validity of the entries made resulting
from programmed processing activities. Examples of application controls include data
input validation, agreement of batch totals, and encryption of transmitted data.

Validity

completeness

accuracy

You might also like