Application controls are a necessary part of online banking because they ensure that input, processing and output of fragile data is complete, accurate, authorized and valid. Online banking and ATM’s require manual and automatic application controls, which operate at the business level. The following ten application controls help to achieve smooth procedures.
1. System Generated Notifications for Unusual Transactions
Control:
The computer system sends notifications that flag transactions not typically made by the customer. An example of an unusual transaction could be making large online purchases from unknown vendors. This is an authorization mechanism because transactions are brought to the attention of bank employees to ensure that they were authorized before being processed. After the notification is sent, the bank should contact clients to verify these transactions using email or SMS for early detection.
Test:
The auditor should make an unusual transaction at random through a test account to determine if the notification system alerts bank employees. Making strange purchases or transferring money to unknown vendors would prompt a notification. The auditor should observe that only authorized personnel are overriding the notification and that the system generates notifications in a timely manner after this false transaction occurred. Logs should be checked to ensure data about the false transaction such as: date, location, amount are correctly generated by the application.
2. Missing Data Check (i.e All Mandatory Fields are Filled In)
Control:
The objective of this control is to prevent incorrect information from being processed and recorded on the bank’s networks. Users often leave blank data fields when completing banki...
... middle of paper ...
...ol, continuous unsuccessful logins will trigger a flagging that will record the time and date the login was made. Further attempts to sign in will be suspended for a specified period of time (i.e. 48 hours) or until contact has been made with the financial institution by the client. A message will also be sent to the authorized user’s email or mailing address to notify them and/or inquire them about the incident (i.e. ask whether it was actually them trying to login).
Test:
An auditor can test this control using a dummy account for testing purposes. The auditor can attempt to log into the account online with an incorrect password a number of times. The login system should time-out the auditor and send notification to the bank server. Therefore, the auditor should observe that no further attempts can be made if pursued and that a login suspension message is visible.
For Tenth National Bank, we have reason to believe that the client intercepted the paper confirmation. After we sent the paper confirmation to the bank, we received an email from Lou Jennings stating that the bank forwarded the confirmation directly to their office instead of sending it to the audit team. In addition, Mr. Jennings provided login credentials and a link to the bank’s website, which did not appear to be reliable. As per the video, “How to Fight Confirmation Fraud”, presented by the founder of confirmation.com, Brian Fox, a fictitious website can be created easily. Our skepticism toward the reliability of the website is based on the unresponsiveness of most of the links on the site; the only link that works is the login button. In addition the website appeared dated and rudimentary. Another factor we found quite strange is that the website only offers paper statement deliveries, which we find highly unusual since paper statements are easier to modify. Furthermore, based on the tracking provided by USPS, the letter is still in the shipping process with no indication that Tenth National Bank has officially received the request for confirmation. This further supports our theory that Lou Jennings intercepted the Tenth National Bank confirmation letter. In our o...
Due to this, the confirmation process has become of high risk. Third party intermediaries have been established to assist in this process by securely transmitting information to the bank and validating the authenticity of the respondent. The use of third-party intermediaries makes it more difficult for anyone to alter confirmation requests. There are risks that come with the use of third party intermediaries because the intermediary’s control weaknesses or deficiencies fall on the auditors as well when relying on confirmations received through them. Auditors must assess that the intermediary’s system of internal control has been designed and is operating effectively to meet the PCAOB
...l. If a transaction is missing or the cash on hand is not adding up management should be notified.
In design of user interface, input controls are an essential element of any type and permits clients to execute different functions to make sure that input data is accurate, protected and complete. Data input controls make sure suitability, comprehensiveness, and accuracy of data throughout its transformation into application of computer or into data of a computer from its actual source. Both scheduled automated processing and manual online input may be used for penetration of data into an application of computer from. The designer of input control must define the satisfactoriness of both and manual controls over input of data to make sure that data is input correctly with most favorable exercise of computerized editing and validation and that procedures of error handling helps the accurate and timely resubmission of all approved data. Audit and Management Advisory Services educate clients that edits of input should be employed with a computer or form application, these input edits range from checks for unacceptable characters, invalid
Consistency constraints may be violated despite proper integrity enforcement in each transaction. For example, incorrect bank balances might be reflected due to simultaneous withdrawals and deposits on the same account, and so
For example in Japan, when the clients send the credits proposal, one of crew in the commercial bank will come to the client’s home as the guess and not showing the real identity or they might used different legal identity, in order to search the information of the client and looking for the truth of the data that have been send to the bank as the credits proposal. If all of the data is true, the banks will considered whether the proposal accepted or rejected, and if the data is not true, automaticaly the credit proposal will rejected by the banks. (Japan, 2016)
Assignment of responsibility for certain functions of the bookkeeping and accounting process ensures that when a problem occurs a specific person is accountable. This, in turn, provides an incentive to that person to do their job correctly because any issue or problem will be their sole responsibility. Splitting duties has a similar impact on employees. By providing a system of checks and balances, i.e. one person keeps the records while another keeps the assets, the chance for fraud is greatly decrease and honest mistakes are easily caught. There are many physical, mechanical and electronic controls that provide further safety for a company’s assets. These include passwords, safes, alarms, security cameras, time clocks and locks (Kiesco et.al, 2008). The use of an auditor or other third party to independently verify the bookkeeping and accounting procedures performed by employees adds another layer of safeguarding to a company’s inter...
...only hear about the different ways that criminals are committing electronic fraud such as hacking in to somebody’s computer and stealing their credit or debit card information. There are also cases where peoples identities have been stolen and whole other lives have been built on them by another person. It all started with check fraud and although it’s not talked about as much anymore, it is still a very large concern for most business owners and people like you and me. The tips that have been provided for us can help protect us from fraud, but it is up to us to take the extra steps to prevent check fraud. We cannot sign up for check fraud protection the same way we could for credit or debit card protection or to help protect ourselves from identity theft. There are processes in place to help us once we’ve experienced check fraud but it is up to us to avoid it.
Given the descriptions of the mental illnesses in our textbook, lectures and various media outlets about the illnesses shown in the HBO movie “Back from Madness – The Struggle for Sanity” I was still surprised how illnesses really affect people (HBO, 1990). When reading textbooks, various media outlets and research papers it is extremely difficult to understand completely the severity of a mental illness. These sources are just descriptions of the illness it doesn’t give a personal account of what the patient is going threw. Taking in account the real affects of having a mental illness on the patient, their family and friends. I was surprised when viewing the documentary that a person with Bipolar I disorder (manic depression) acted the way Todd did. I am aware that Bipolar I disorder is known as someone who has a manic occurrence that results in a period of bizarre elevated mood and behavior that interrupts life. The person will most likely experience episodes of depression. The behavior that I saw from Todd in the movie was completely different than I imagined people who have Bipol...
a scanning devise that reads reading the bottom of the checks for account routing information. While the actual Dollar a real life person inputs amount of the check with a ten key keypad for entering in numbers in a designated area of the check for accuracy of currency. This method is extremely fast and accurate for banks so that they can process thousands of checks in a timely manner.
The principle territory we are planning to address is accounting fraud and how it could impact an organization by answering, the who, what, when and how. Its goal is to increase the awareness of accounting fraud and fraud counteraction. The intriguing thing about accounting fraud is that little disclosure as a rule usually leads to an enormous increase in fraud. A number of categories and sub-categories can be divided up for fraud.
(6)In order to ensure safety of company property, the company bank account should be monitored by someone out of the account payable department. However, in this system, there is no such person who could reconcile the account. As a result, it is difficult to measure whether the payment is equal to the value of purchased good. On top of that, treasurers and account payable clerks can hardly be controlled. The owner of this business is recommended to find some trusted and reliable accountants as supervisors of the company bank account. And the company should also design a system which requires the authorised fingerprint for each payment. This can maximize the protection of the company's property.
The audit risk is consists of three elements which are inherent risk, control risk and detection risk. The audit model is important to the audit process. The audit risk model provides the basic for the current emphasis on the risk-based audit approach and it assists the auditor in determining the scope of auditing procedures for a particular account balance or class of transactions. Based on the assessed risk, the auditor may determine whether the use of more tests of control or substantive procedures is appropriate to address the
Overall, the company is having ineffective controls regarding different departments and in the whole organization. An effective internal audit department should be established within the organization which should test the effectiveness of these controls on regular basis and make it sure that all controls are working effectively and efficiently with the different departments of the organization. Also the Internal auditor should implement the most effective processes and measures to prevent and detect the fraud, corruption and non compliance with the laws and regulations in the organization. Establishment of internal audit committee would be helpful in this regard which comprises of executive and non executive directors.