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Internal Controls & Risk Management

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Smith, a certified public accounting firm, was engaged to audit the financial statements of the Sky-is-the-Limit company. The company has its own IT installation. While obtaining an understanding of internal control, Smith found that Sky-is-the-Limit lacked proper segregation of the programming and operating functions. Smith analyzed the internal control surrounding the system to ensure that the corporate governance was being maintained, and he concluded that the existing compensating general control activities provided reasonable assurance that the objectives of internal control were being met.

Prepare a letter addressed to the board of directors that discusses the following:

1. How is the separation of the programming and operating functions accomplished in a properly functioning IT environment?
2. Explain the 3 subdivisions of information systems management, and discuss how they apply to this situation.

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Solution Summary

The separation of the programming and operating functions is discussed step-by-step in this solution. The response also has the sources used.

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321, Winter Street,
Great Lakes Tract, CA 29953
January, 26, 2013
Board of Directors,
Sky-is-the Limit Company,
24, Company Avenue,
Sugary Lakes, CA 33347,

Dear Sirs,

In our company there is separation of programming and operating functions. The programming functions are performed by the employees or vendor, who develop the software, install it, launch it, modify it, and maintain it. These functions are different and separate from the operations of the company. I elaborate the operations that are carried out in the finance department. These include planning, financial ...

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