 and welcome to the session in which you would look at batch input controls or sometimes called control totals. So in your textbook or in your CPA review course, they might refer to it as control totals. What is a batch total or batch input control or control total? It's when you sum up a particular field in a collection of data of items, use and use that total as a control to ensure somehow to make a conclusion that all the data has been entered into the computer system. Usually when we have batch total or when we are using batch input control, because remember we talked about input control in the prior session and we talked about how to protect the system from the garbage coming into the system. Now we are dealing with batch processing. Now we're going to see what batch processing is. But under batch input control, we could have a record count total, a hash total and a financial total. But before we discuss those three items record count total, hash total and financial total, we need to differentiate between what's called batch processing and real time processing system. Before we proceed any further, I have a public announcement about my company farhatlectures.com. Farhat accounting lectures is a supplemental educational tool that's going to help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true-false questions, as well as exercises. Go ahead, start your free trial today, no obligation, no credit card required. Batch processing is when we bunch, when we group, several transactions together could be 10, could be 100, 1000, depending on the nature of the company and the industry in which you are working in and you process them all at once. You might be saying who would do something like this? Well, not long ago. My first, my second job after college was with a brokerage firm called Mirror Lynch. In Mirror Lynch, I work in a department called employee stock purchase plan where employees deduct money from their paycheck to buy stocks of their company. For example, if you work for PepsiCo, you'll have, you know, I don't know, $300 deducted from your paycheck to buy PepsiCo stock usually at a discount. It doesn't matter. Then at some point, those employees wants to sell their shares. So let's assume you called on a Tuesday at 10.30 a.m. New York time. Well, the market is open on Tuesday 10.30 a.m. because the market opened at 9.30 a.m. Guess what? Well, if you want to sell your shares, we will not sell your shares until Wednesday, the following day at the opening at 9.30 a.m. So that's what happened. So why? What we're going to do, we're going to take all the sale that the people requested on Tuesday, people that work for PepsiCo, and sell them all at once on Wednesday. You might be saying, wow, is that how it works? Yes, that's how it used to work. So if you want to sell your shares, it will sell the following day. Now, these days, when you want to sell your shares, it's real time processing. But the point is I'm trying to illustrate that batch processing what is still in effect. Also, your electric bill, for example, the electric company, when they collect all the information, when they read your meters, they go back and process the transaction altogether. Also, when I give an exam and I use a Scantron, I give the Scantron to all my students, to my 30 students in class. And once they are done, I process all the Scantron all at once. Again, this is a batch processing system. Now, in a batch processing system, you really don't get an immediate response. You wait for it until the following day to see what happened or whatever the time the processing happened. So if you're looking at an electric bill, they process all the numbers and maybe overnight. And the following day, they would go through it and they would find out exactly what was the total. Now, in a real time system, it's totally different. Everything is processed immediately. So if you want to sell your PepsiCo shares, you would sell them at 10.30 a.m. on Tuesday versus waiting. Also, for example, if you're booking a hotel room or a concert seat somewhere, batch processing doesn't really work. Think about it. If you're booking a hotel room and you booked room number 553 in a certain hotel and they did not reserve it for you because they're going to wait until the end of the day to process all the reservation. Well, someone else might also book room 553. So that's not possible. And to compare and contrast a real time system to a batch processing system right now, most of my students complete their exam or their quiz on a learning management system, where they answer the questions and they get the answer immediately versus waiting for me to process the scantrons altogether. So this is real time system. No delays. It's always up to date. Think about another example. If when you reserve a seat on an airline, as soon as you take that seat, it's reserved under your name. You would select the seat, you'll pay for it and it's taken out. Well, we cannot use batch processing in those type of businesses. So now most businesses these days use real time. Nevertheless, understanding how bad batch processing work and their input control is extremely important. So let's start with a financial total. We have three, usually three input control financial total and we'll work an example to illustrate those techniques. It's a summary of all total fields amount for all record in a batch that represent a meaningful dollar amount. So simply put when you add up all the dollar amount, it represents something, the total dollar amount. So it's a financial total. So it should make sense because you are adding up dollar and cent. So that makes sense. Hash total. Hash total is a little bit different. It's when you, when you add up all the numbers of something, okay, but those numbers don't represent any meaningful total unless you are adding them up. And there's a reason why you are adding them up and we'll see an example. Summary total of codes from all records in a batch that don't represent a meaningful total. And the third total is the record count. And this is summary of all total physical record in a batch. Simply put, how many unit or how many processes did we, did we generate? So record count, how many times are we doing this? How many customers do we have? How many transactions? So it's counting the count, the record count. The best way to illustrate this is to look at an example. So let's look, take a look at this town, small town USA, the population is 102. And let's assume you are in charge of their electric bill. You work for the local electric company and you are in charge of it. So there are 16 homes in this town. So the count is 16. We have 16 meters. Each meter will have their own separate account number, of course, because each customer is different. For example, customer one, one, two, five, six, customer two, three, six, four, five, customer four, two, five, four, two, so on and so forth. And each customer is built for a certain amount. So that's the dollar amount. So here's what we can do. And let's assume we are using batch processing where we collect all the data, then we process it the following day or all at once at the end of the day. The first thing is when we run, we want to run a count total to do what? To make sure we have collected 16 bills. So the record count will show us indeed we collected 16 bills. So if you left someone out, the count will show 15 and will say, well, why are we only processing 15 customers while we have 16 billable homes? So that's the thing. That's the account. The second count that the second input that we can do is we can add all the account numbers, all the account numbers. Now if we all, we add up all the account numbers, they don't mean anything. Absolutely nothing. 57,322. What does that mean? Well, here's what happened. Here's the fear. The fear is you did not build customer 13. What customers 13, what you did is you build another fictitious customer, you made up the number for that customer. So you made up the number and you have something instead of count 13, you have another customer. Now when we did the count, we have 16. So we have 16 customers that doesn't raise any red flags. But since you used a different account number, let's use different, you made up number 5423. And assuming 5423 doesn't exist. Now when you add them up, they will not add up to 57321. Now the person who's doing this with the account number, they don't really know that if they don't know we're doing a hash total, they would not know that as soon as they change the account number, input some other number to build some fictitious client, we're going to find out because all the account number should add up to 57321. So this is the important of the hash total. You don't let the people who are processing those bills know about the hash total because if they know, they will try to circumvent the system. So although we could have 16 customers, but one customer out, the hash total will catch it. Now we have a dollar amount total, which is 6,019. Now the dollar amount total is based on estimate. So we would estimate, for example, for a particular month, the company should be able to estimate, for example, the bills should be between 5,900 and 6,100. Well, it's 6,019 dollars. That's within reason. So the hash total would help you if it is within reason, we are in good shape, which is that's what the hash total is. So taken all together, those three totals or batch total or control totals would help us in our input control batch total. And that's the purpose of the input control is to use the methods to make sure you are not missing anything. No one is booking any fictitious transaction, so on and so forth. What should you do now go to Farhat lectures and work additional MCQs through false, whatever resources available to help you understand input controls, whether that's real time input control or batch processing, we're going to look at process control, output control controls are very important, whether you have a manual accounting information system or an automated IT accounting information system, most information system these days are IT. So you have to be very familiar with controls. Good luck, study hard and welcome to small town USA.