a. General IT Controls Expected at Holloway Interiors Limited:

• Development of IT Systems and Applications:
  • Standards must be in place for designing, developing, programming, and documenting new systems.
  • Formal approval by management for system design.
  • Testing procedures for all new systems to ensure reliability and security.
  • Segregation of duties between system developers and testers to prevent fraud or errors.
• Documentation and Testing of Program Changes:
  • Formal authorization and testing required for any program change.
  • Documentation of all changes, ensuring compliance and transparency.
  • Training staff on program updates and their appropriate use.
• Access Control and Prevention of Unauthorized Program Changes:
  • Separate duties between programmers and system operators.
  • Restricted access to program files.
  • Implementation of program logs to monitor and record access and changes.
  • Use of antivirus software and secure backups to protect against malicious changes.
• Data Security and Continuity of Operations:
  • Procedures to prevent unauthorized access to data files.
  • Transaction logs to track access and modifications.
  • Firewalls and secure access to online platforms for sales.
  • Disaster recovery and backup systems to prevent data loss.

b. Five Steps Model of Recognizing Revenue under IFRS 15:

• Step 1: Identify the Contract
  • A contract is an agreement with enforceable rights and obligations. This may be written, oral, or implied by customary business practices. Contracts exist if the consideration is probable, rights and obligations are identified, the contract has commercial substance, and parties approve and commit to their obligations.
• Step 2: Identify the Performance Obligations
  • Each promise to transfer goods or services to the customer is a performance obligation. A good or service is distinct if it benefits the customer on its own or with readily available resources and is separately identifiable from other promises in the contract.
• Step 3: Determine the Transaction Price
  • This is the amount expected for transferring goods or services. Considerations include potential revenue reversal, payable amounts to customers, non-cash considerations, and any financing component.
• Step 4: Allocate the Transaction Price to the Performance Obligations
  • Allocate the transaction price based on the standalone selling price of each performance obligation. If direct observation is unavailable, estimates may be used based on market conditions, cost forecasts, or other relevant methods.
• Step 5: Recognize Revenue When (or as) the Performance Obligation is Satisfied
  • Revenue is recognized upon the transfer of control, either over time or at a specific point. Indicators include payment obligations, transfer of legal title, possession, and risks/rewards of ownership.