Question

Smith, a certified public accounting firm, was engaged to audit the financial statements of the Sky-is-the-Limit company. The company has its own IT installation. While obtaining an understanding of internal control, Smith found that Sky-is-the-Limit lacked proper segregation of the programming and operating functions. Smith analyzed the internal control surrounding the system to ensure that the corporate governance was being maintained, and he concluded that the existing compensating general control activities provided reasonable assurance that the objectives of internal control were being met.

Prepare a letter addressed to the board of directors that discusses the following:

• How is the separation of the programming and operating functions accomplished in a properly functioning IT environment?
• Explain the 3 subdivisions of information systems management, and discuss how they apply to this situation.

Answer 1

(1). @) In a Poopesty functioning IT eoviodoment, howis the sepao -tion 6 the poogdamming and Opesating functions achieved ? in auditing undes computer enviroment, the key interna eontiol Puropose an bl arochieved by gestoicting the operatos foe accessing the computeo or to tare make any infut or out ony documents and operating poogram credentious.te Shold be Poryent foom Changing any oresoting Poogoams. Duoing Pooduction Processing. the Progoonmeas must not E Peomissibie into the compater oom. Propes Poior sheduung must be Poesent for test and it ought to kye oun by the operatos S. fin the opesatoss mud not to be auouasle to make any changes in :the Poogsam cwhile it is being Poocessed, If any poOgsams are unsuccessful and error qake Place, it is suPRosee to bse sent back to Pouggamhmers for Tectification and Hthe opesators must not to issres. any to fix (b) what are the Compensating genegau contoois that you most like -found ? compensating contools are the cotouIs which are in u seat deparotment. It is an uncomplicared Pocess system whereby it Ensrses that all the toansactions. have been PoocessedOnd acsuoa hce that Ppropes and authosized toansactions has only taken Place,

The mostly found compensating contods undes Poogroamming and ofegatingfunctions arse: O Analysis as to the time lost in cos in Computer (2) Reguiation cand contool OG all OPersations in Computes, 3) Adequare allocation c6 PropeD vocation to all employees (4) Relate the avesage Compter time to a Persticulas stan -darsd. 6) two os mose Oreotors Pesfooming Joint Opesations. The subdivision 06 infosmation systems mangement Cse as: CosPosate lever TEam level Individual lever The giobal lever uses the information genesated bythe whole infogmation System as a way to guide decision mating stoategic goals. and set The team level sharses the înfoomation that is impostnt o the day to day activities o unning the frsm The andividual level is considers to be the stsonges Jever in determining uhether an Individua Parsticipates in Spost.