IDS Corporation processes mortgage payments and updates for itself, as well as for a number of other mortgage service companies. The program tables are updated frequently for changes in interest rates for variable mortgages, but not for the fixed rate mortgages. Because there are a number of mortgage divisions as well as outside companies for which it provides processing, the applicable edit tests for a particular division or department are stored in a table utilized as part of a general validation routine before transactions are processed. Authorized interest rates are kept in another table and are called by the application program according to identified job codes.

Required

a. Explain how the auditor might use the ITF in auditing the mortgage processing application described above.

b. What are the major limitations of using the ITF in this situation?

c. Assume that the auditor is concerned with the operation of the edit controls and is especially concerned that the control procedures either are not functioning effectively or are overridden by management.

Would the ITF identify the problem?

d. Would the ITF be useful in identifying whether or not fictitious data had been added to the system? Explain.