Introduction to IT Application Controls: What They Are and Why They Matter
Nobody teaches you ITACs. But every audit team expects you to test them.
Welcome to the first edition in this 10-part newsletter series where we’re diving deep into one of the most overlooked areas in IT audit IT Application Controls, also known as IT Automated Controls.
If you’ve been in audit long enough, you’ve probably heard these terms tossed around during meetings, walkthroughs, or documentation reviews. But rarely do people pause to truly explain them.
That changes today.
Because before we can test an automated control or rely on one, we need to understand what it actually is.
What Are IT Application Controls?
Let’s start simple.
IT Application Controls are automated controls configured within systems to address specific risks without human intervention.
They’re different from:
Manual controls, where a person does everything.
IT-dependent manual controls, where a person performs the control, but uses IT (like pulling a report or checking an email trigger).
In contrast, automated controls are pre-configured within applications to perform a task based on certain logic, input, or event without manual execution.
Once configured correctly, these controls run in the background.
Silently. Reliably. Automatically.
And that’s where most auditors lose visibility.
An Example You Already Know
Let’s say an employee is leaving the company. In the past, their manager would manually log into each system and remove their access.
But today?
The HR team updates the employee’s termination date in the HR application. That information automatically flows into the Identity Access Management (IAM) system, which then disables their access to all linked applications on the exact termination date.
No one has to manually do anything after the date is set.
That’s an automated control.
The system:
Picks up a trigger (termination date)
Applies business logic (disable access)
Executes the action (deactivate access across apps)
It’s reliable. Efficient. And exactly the kind of control external auditors and management teams rely on to reduce risk as long as it works as intended.
Why Auditors Need to Understand This
Automated controls are everywhere especially in financial business processes.
From journal entries being auto-posted to GLs.
To exception reports being generated when thresholds are breached.
To workflows auto-approving based on defined parameters.
Each of these automations is built to address a risk.
But here's the catch: if we don’t understand what the automation is doing, how it gets triggered, or what logic it applies we can’t test it. Worse, we can’t trust it.
And when we don’t understand it, we end up doing this:
Relying on process narratives or control descriptions without questioning them
Asking the wrong walkthrough questions
Failing to identify the right evidence
Or assuming “it just works” because it’s a system
That’s not audit.
Audit is understanding how the application works and how it contributes to controlling risk.
Where ITACs Show Up in the Real World
A simple way to identify ITACs is this: Follow the transaction.
Trace how it flows from initiation to reporting.
At every step, ask:
Is the system validating anything?
Is it performing a calculation?
Is it transforming or transferring data?
Is it making a decision based on logic?
Is it posting or processing something automatically?
Each of those could be an automated control.
Let me give you one more real-world example:
In many ERPs, accountants prepare general journal entries in advance. They balance the entries, assign accounts, and schedule them for automatic posting on a specific date.
When that date arrives, the system posts those entries directly to the general ledger.
No one has to manually hit “Post.”
That’s an ITAC.
What This Series Will Cover
This edition was all about building the foundation. In the next few weeks, we’ll break down topics like:
Types of IT Application Controls (with real examples)
How to Test Configuration-Based ITACs
Interface Controls and What Can Go Wrong
How ITGCs Support ITACs (and what to document)
Why Understanding System Logic is Critical
And more...
But here’s the one truth I want you to take away today:
The best auditors don’t just document what a control does. They understand how and why it works.
That’s what separates average testers from trusted advisors.
So whether you’re new to IT audit or just never got a proper explanation.
I hope this series gives you the clarity I wish I had when I was starting out.
Let’s learn this together. One control at a time.
See you next week!
Chinmay
great stuff.. very informative!!!