By now, you are familiar with the control goals listed in the column headings of the matrix. We will discuss only two of those goals. First, as you learned in Systems Design and Implementation, the COSO study and report on internal control recommends three categories of control goals, the third being compliance with applicable laws, regulations, and contractual agreements. Also, recall that we elect not to show the “compliance” goal as a separate category but to include it under the system goals for the operations system. As we did with Causeway’s cash receipts process in CONTROLLING INFORMATION SYSTEMS: PROCESS CONTROLS, we assume that the company whose process appears in Figure 12.10 has loan agreements with its bank that require it to maintain certain minimum cash balances on deposit. For that reason, operations process goal C—“To comply with minimum balance agreements with our bank”—appears in Figure 12.11.
Our second comment concerns the input validity (IV) control goal. We define valid remittance advices as those that represent funds actually received and for which cash discounts have been authorized and approved.