Output Controls
Output controls are designed to ensure that information is not lost, misdirect, or corrupted and that system processes function as intended. For example, managers receive daily summaries of sales orders placed by customers, goods shipped, and cash received,and use such data to monitor the status of their operations. Output control can be designed to identify potential problems. For example, an exception report derived from the customer open order file listing end-of-day open sales orders can identify orders placed but not shipped. Such a report can help management assess the operational performance of the shipping process.
Reconciling the general ledger is an output control that can detect certain types of transaction processing errors. For example, the total of all credit sales recorded by billing should equal the total increases posted to the AR subsidiary accounts. A sales transaction that is entered in the journal but not posted to the customer’s account would be detected by an imbalance in the general ledger. The specific cause of an out-of-balance condition could not be determined at this point, but the error would be noted. Finding the error may require examining all the transactions processed during the period. This could be time consuming. For this reason, rather than summarizing an entire day’s transactions in a single batch, entities often group transactions into small batches of 50 to 100 items. This facilitates reconciling balances by isolating a problem to a specific batch.
Another important element of output control is the maintenance of an audit trail.To resolve transaction processing errors, each detected error needs to be traced to itssource. It is not sufficient to know that 100 transactions entered the system and only 99 came out. Details of transaction processing produced at intermediate points can provide an audit trail that reflects activity through every stage of operations. The following are examples of audit trail output controls.