Problem
Happy Valley Ltd (HVL) is a wine merchant operating out of Adelaide in South Australia. HVL's customers include the general public, as well as domestic and international wine distributors. In order to remain competitive, HVL expanded into the business-to-business (B2B) and business-to consumer (B2C) domain in 2019 - thereby allowing customers to purchase wine online.
Recognising the need for an interface between the web-based booking system and the general ledger, HVL upgraded the existing accounting software. They also updated their existing hardware in order to be able to cope with the additional speed of processing, and the increased storage space requirements.
HVL had great plans for the future, and during the year ended 30th June 2020, they upgraded their entire general ledger system, including an automatic interface with the inventory and payroll sub ledger systems.
As part of the planning you have identified the following IT application controls (AC) and IT general controls (GC):
• Both the B2C and B2B systems are programmed to reject orders for products that are out of stock.
• The system is programmed to automatically place an order for new stock, when stock levels fall to a predetermined reorder level.
• High value stock is stored in a separate 'premium' cellar. Only a few key staff members have been granted access to this high-value area, and must use retina scanning technology to gain access.
• To safeguard the integrity of the payroll function, the system is programmed to automatically generate an 'exception' report when an employee's master file is updated.
• To prevent unauthorised access to the payroll system, a login-password system with multi factor authentication is used.
Task
For each of the controls listed above explain:
A. How you could test the control.
B. What result you would expect to get if the control was working.