When auditing an electronic data processing system, the CPA must be aware of the different types of controls. The controls include those incorporated in application programs and those built into the equipment by the manufacturer (hardware controls).

1. Why are accuracy checks on system components or peripheral equipment necessary?

2. Define and give the purpose of each of the following program checks and controls:

a. Record counts

b. Limit check

c. Reverse multiplication

d. Sequence check

e. Hash totals 

3. When computers are used, the CPA has to be familiar with the information stored on magnetic-tape reels, and so forth. A common form of magnetic-tape-record retention employs the grandfather-father-son principle.

a. Define the grandfather-father-son principle.

b. Why are grandfather-father-son tapes usually stored at different locations?