Reference no: EM132994924

Question - The audit senior on the audit of Boudrias Baked Goods is preparing the audit plan for the year ended December 31, 2020. The following notes relate to the accounts payable application system that went live on June 1, 2020.

The new accounts payable application is more complex than the old system, but its reporting function provides more detail. For example, the new application integrates with various electronic payment systems, reducing the need to process paper cheques.

Due to the brief time available to implement the new system, the previous application ceased operation on December 31, 2019, and the new application went live on January 1, 2020, without running parallel with the previous application. Staff training and testing of the new application were limited.

Access to the accounts payable master files is restricted to the AP supervisor and her assistant. Access to transaction files is restricted to AP staff who are responsible for the input of vendor invoices and processing payments.

Prior to the introduction of the new accounts payable application system, the AP master and transaction files were kept in a separate database from the general ledger application. At the end of each month, the IT staff imported transaction data from the separate database into the general ledger. Management decided to upgrade the existing accounting system due to the frequent problems encountered by IT staff when importing data into the general ledger.

Required -

a. Based on the information above, explain two relevant concerns you may have about the accounts payable application's integration with the general ledger application.

b. Describe one IT application control that would ensure the accuracy of the input of vendor invoices into the system.

c. Describe one IT application control that would ensure the occurrence of purchase transactions.