Linder Company is completing the implementation of a new computerized inventory control and purchase order system. Linder's controller wants the controls that are incorporated into the software of the new system to be reviewed and evaluated, in order to ensure that all necessary controls are included and function properly. The controller respects and has confidence in the department's work and evaluation procedures, but would like a separate appraisal of the control activities by the internal audit department.

Hopefully, a review would reveal any deficiencies in control activities and lead to immediate correction before the system is on-line. The internal audit department carefully reviews controls when evaluating a new system.

Required:

1. Identify the types of controls that should be incorporated in the new software.

2. Explain how the existence of the computer controls and their performance are verified by auditing through the computer.