1. General and application controls

The following controls have been implemented at GH (Pty) Ltd since they have a fully integrated computerised accounting system. The research director, Bonginkosi Dhlamini, is always interested in learning something new. He has asked you to explain general and automated application controls to him. He then presented you with the following random examples of GH (Pty) Ltd internal controls and asked you to help him classify each control correctly.

1. The IT steering committee and the head of the department must approve any change requests made by a user department before a change is affected.

2. The senior buyer and the finance manager must independently enter their unique passwords to affect changes to the banking details of suppliers.

3. Wage totals are calculated by the wages programme, incorporating the different rates for normal time and overtime.

4. The IT section head and the financial director regularly review the bank activity logs detailing all activities that have taken place. The financial director would then follow up on any suspicious activities.

5. A few months after the introduction of the new inventory application system, the internal audit department of GH (Pty) Ltd conducted a post implementation review.

6. Entry to the section of the warehouse where high-value items are kept is restricted. Swipe cards and PIN numbers are used to limit access.

7. Nine-digit employee numbers are randomly generated by the system after the details of new employees have been entered and authorised in the personnel masterfile.

8. The receiving clerk will not accept goods delivered by a supplier if the order number for the goods entered into the purchase order file does not match a valid purchase order.

9. All new employees in the payroll section must write a computer literacy test and demonstrate their computer skills. 10. The company has implemented the principles of least privilege, defence in depth and so forth in its computerisation With reference to the general and application controls section: Indicate whether each of the controls listed under 1

10 above, is a general control or an automated application control. For the controls which you identify as general controls, indicate the category of general control each one relates to.

Present your answer in the following tabular format: Number, General or Automated Application control, If general, category of control

2. Revenue and receipts approval of pending sales orders

GH (Pty) Ltd sells their manufactured sporting goods to various retailers in South Africa, Namibia and Botswana. Sales orders can be emailed or phoned in and are then entered into the fully integrated computerised accounting system. The sales order clerks access the sales order application and completes an on-screen order form which is then automatically written into a pending sales order file. Stringent application controls ensures that orders captured are valid, accurate and complete. All pending sales orders must be approved by the credit controller on the system (thus not manually) before the order can be accepted. Processing of sales orders occurs in real time. With reference to the Revenue and receipts approval of pending sales orders section: Describe the internal controls for the approval of pending sales orders on the computerised system by the credit controller.

3. Acquisitions and payments receiving of goods function

When raw materials from suppliers are delivered to GH (Pty) Ltd, any one of the receiving clerks will receive the goods. The receiving clerk will not accept goods delivered by a supplier if the order number for the goods entered in the system is not valid. After checking that the order number is valid, he will check the number of boxes being delivered against the supplier delivery note, sign the delivery note and retain a copy. Where the boxes delivered do not agree with the suppliers delivery note, the difference is recorded on the delivery note and signed by both the receiving clerk and the suppliers delivery personnel. The boxes are left in the receiving bay until a warehouse assistant have time to move it into the warehouse where the goods are unpacked and stored; usually within a day or two.

With reference to the Acquisitions and payments receiving of goods function section: Recommend improvements to the internal controls of the receiving function of the GH (Pty) Ltd. Provide a reason/justification for each recommendation. Note that there may be more than one justification for a single recommendation. Present your answer in tabular format: Recommendation ,& Justification