In accounting and business, the utilization of IT to control operations involves specific activities performed by systems or individuals, who are trained and designed to ensure the achievement of the business’s objectives and goals. They are a part of the enterprise’s internal control. The intention of the information technology control relates to the integrity, availability, and confidentiality of the data and the overall management of the business enterprises IT functions.
These controls are typically categorized into two groups: IT application controls and IT general controls, commonly referred to as ITGC. The ITGC function can control over computer operations, program changes, program development, IT environment, and access to data and programs. Let’s learn more about these controls down below.
What Does IT Controls Refers To?
The IT application controls usually refer to the transaction processing controls, which are sometimes called the input-processing-output controls. IT controls have been provided with an increased prominence in corporations, which are listed in the United States.
The COBIT Framework, or Control Objectives for Information Technology, is a popularly used framework that is declared by the Information Technology Governance Institute, which defines all kinds of application control and ITGC objectives and recommended evaluation approach. The organization’s IT departments are usually led by a CIO or Chief Information Officer, who’s responsible for ensuring the effectiveness of IT controls that are used.
The Information technology General Controls (ITGC)
IT general control represents the foundation of the structure of IT control. It helps ensure that the reliability of the data that is generated by the IT systems, as well as supporting the assertion which the systems operate as it was intended and that its output is reliable.
Typically, ITGC includes the following types of controls:
- Document Version Control/Source Code Procedures: it is a kind of control that is designed to protect the program code’s integrity.
- Control Environment, or controls that are designed to change the corporation’s culture, or “tone it to the top.”
- Logical Access Standards, Processes, and Policies: it is a control that is designed to manage the access, depending on the business’ needs.
- Standards of the Software Development Life Cycle: it is designed to ensure that the IT projects have been effectively managed.
- Change the Management Procedures: the controls are designed to ensure that the changes have met the requirements of a business and has been authorized.
- Physical Security: it is a control that ensures the physical security of the information technology from environmental risks, as well as from individuals.
- Technical Support Procedures and Policies: this policy is to help the users perform accurately and be able to report problems.
- Disaster Recovery/Recovery and Backup: it is a procedure that enables to continue the process despite the adverse conditions.
- Problem Management Procedures and Policies: it is a control that is designed to address and identify the root cause of the problems.
- Incident Management Procedures and Policies: it is a control that is designed to address all the operational processing errors.
- Software/Hardware testing, configuration, installation, policies, management standards, and procedures.
The Information Technology Application Controls
The IT application also called the program controls, are designed to be fully automated to ensure the accurate and complete processing of data from the input and into the output. The controls may vary depending on the business purpose of the particular application. These controls could also help ensure the security and privacy of data that is transmitted between the applications.
Categories of Information Technology Application Controls may encompass:
- Identification- a control that ensures all the users are irrefutably and uniquely identified.
- Completeness Check- a control that would ensure all the records have been processed from initiation up to completion.
- Authentication- it is a control that provides an authentication mechanism in the system application.
- Input Controls- it is a control that ensures the integrity of data that is fed from upstream sources, and then into the application system.
- Validity Checks- a control that makes sure only the valid data is processed or input.
- Forensic Controls- a control that makes sure the data is scientifically and mathematically correct based on the outputs and inputs
- Authorization- a control that ensures only the approved business users will have access to the application system.
The Internal Control Frameworks
In this section of the article, we would be learning about the basic knowledge about COSO and COBIT, which are both part of the internal control frameworks. We will first start off with COBIT:
Control Objectives for Information Technology (COBIT)
The COBIT is a widely used framework that contains the best practices for both application and ITGC controls. It consists of processes and domains. The basic structure will indicate that the IT processes a satisfying business requirement, which would then be enabled by a particular IT control activity. In addition, it also recommends the best method and practices of the enterprises IT controls evaluation.
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
The COSO identifies about five components of the internal control, it includes risk assessment, control environment, information and communication, control activities, and monitoring. All of these components should be in place to accomplish the disclosure objectives and financial reporting. The COBIT provides the same detailed guidance for IT, while the related Val IT would concentrate on a higher level of IT governance, as well as the value-for-money issues.
COSO’s five components can be visualized like the three-dimensional cube’s horizontal layers, and the COBIT objective domains will apply to individuals and in accumulation. The COBIT’s four major domains are acquired and implement, monitor and evaluate, plan and organize, and deliver and support.
Aside from the given facts and descriptions above, there are to information technology in controlling machines. And since technology is basically taking over our world today, controlling machines with information technology will never get old. With technology today. The previous issues of slow intervals, complex systems, and overwhelming data storage have become relics of the past.
The current technology is capable of transforming and enhancing the internal operations of organizations.