You have been engaged by Central Savings and LoanAssociation to audit its financial statements for the year ended December 31, 20X1. The CPA who audited the financial statements at December 31, 20X0, rendered an unqualified opinion.
In January 20X1, the Association installed an on-line real-time computer system. Each teller in the association's main office and seven branch offices has an on-line input-output terminal. The customer's mortgage payments and savings account deposits and withdrawals are recorded in the accounts by the computer from data input by the teller at the time of the transaction. The teller keys the proper account by account number and enters the information in the terminal keyboard to record the transaction. The accounting department at the main office also has direct access to the computer via on-line terminals. The computer is housed at the main office.
In addition to servicing its own mortgage loans, the association acts as a mortgage servicing agency for three life insurance companies. In this latter activity, the association maintains mortgage records and serves as the collection and escrow agent for the mortgagees ( the insurance companies), who pay a fee to the association for these services.
Required
You would expect the associationto have certain internal controls in effect because an online real-time computer system is employed. List the internal controls that should be in effect solely because this EDP system is employed, classifying them as
a. Those controls pertaining to input information.
b. All other types of computer controls.