What is the general approach to test application controls in batch processing?

The key to understanding the general approach to testing application controls in batch processing lies in the fundamentals of how these systems operate. In batch processing, multiple transactions are collected and processed as a single unit, which means that the integrity and accuracy of each transaction need to be thoroughly verified.

Auditor-created data submission in a transaction file allows auditors to generate control scenarios that can be used to validate the application's functionality and ensure the controls are effectively working. By submitting data that mimics real transactions, auditors can evaluate how the system handles processing, error management, and compliance with control objectives. This method provides direct insight into whether the application is processing transactions correctly and making adequate distinction between valid and invalid data.

Conversely, testing only completed transactions would not provide insight into how the system processes transactions during the batch phase. Analyzing prior audit reports or reviewing end-user training documentation, while potentially useful in a broader audit context, do not directly address the operational effectiveness of application controls in real-time processing. They are more retrospective and lack the specificity needed for current operational testing.