An electronics retailing firm upgraded to an automated inventory and billing accounting system. During an annual audit, the internal auditor discovered that several posted sales records were deleted directly from the system database without leaving any transaction history or log of user actions. Which internal control deficiency directly allowed this unrecorded deletion of financial data to occur?
- Absence of an immutable audit trail and user access privilege restrictions on the databaseAnswer
- BComplete reliance on computerized software under the assumption that automation inherently eliminates fraud
- CUtilization of batch data processing rather than real-time online transaction processing
- DFailure of the system's edit check to perform range validation during data entry
Answer
Absence of an immutable audit trail and user access privilege restrictions on the database
An audit trail in a computerized accounting system records all transaction processing history, updates, and deletions along with timestamps and user identification. Combined with access controls restricting direct database manipulation, these controls ensure data integrity and accountability.
Step-by-Step Solution
Key Concept
Audit Trail and Access Control in Computerized Accounting