Question 1

A problem for a CPA associated with advanced IT systems is that:

Accepted Answer

A)  The audit trail normally does not exist. 
B)  The audit trail is sometimes generated only in machine readable form. 
C)  The client's internal auditors may have been involved at the design stage. 
D)  Tests of controls are not possible. 
A)  The audit trail normally does not exist. 
B)  The audit trail is sometimes generated only in machine readable form. 
C)  The client's internal auditors may have been involved at the design stage. 
D)  Tests of controls are not possible.

Question 2

Passwords for microcomputer software programs are designed to prevent:

Accepted Answer

A)  Inaccurate processing of data. 
B)  Unauthorized access to the computer. 
C)  Incomplete updating of data files. 
D)  Unauthorized use of the software. 
A)  Inaccurate processing of data. 
B)  Unauthorized access to the computer. 
C)  Incomplete updating of data files. 
D)  Unauthorized use of the software.

Question 3

Which of the following is least likely to be a general control over computer activities?

Accepted Answer

A)  Procedures for developing new programs and systems. 
B)  Requirements for system documentation. 
C)  A change request log. 
D)  A control total. 
A)  Procedures for developing new programs and systems. 
B)  Requirements for system documentation. 
C)  A change request log. 
D)  A control total.

Question 4

An auditor may decide not to perform tests of controls related to the control activities within the computer portion of the client's internal control. Which of the following would not be a valid reason for choosing to omit such test?

Accepted Answer

A)  The controls duplicate operative controls existing elsewhere. 
B)  There appear to be major weaknesses that would preclude reliance on the stated procedure. 
C)  The time and dollar costs of testing exceed the time and dollar savings in substantive testing if the tests show the controls to be operative. 
D)  The controls appear adequate. 
A)  The controls duplicate operative controls existing elsewhere. 
B)  There appear to be major weaknesses that would preclude reliance on the stated procedure. 
C)  The time and dollar costs of testing exceed the time and dollar savings in substantive testing if the tests show the controls to be operative. 
D)  The controls appear adequate.

Question 5

If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll computer application?

Accepted Answer

A)  Net pay. 
B)  Department numbers. 
C)  Hours worked. 
D)  Total debits and total credits. 
A)  Net pay. 
B)  Department numbers. 
C)  Hours worked. 
D)  Total debits and total credits.

Question 6

Which of the following constitutes a weakness in the internal control of a computer system?

Accepted Answer

A)  One generation of backup files is stored in an off-premises location. 
B)  Machine operators distribute error messages to the control group. 
C)  Machine operators do not have access to the complete systems manual. 
D)  Machine operators are supervised by the programmer. 
A)  One generation of backup files is stored in an off-premises location. 
B)  Machine operators distribute error messages to the control group. 
C)  Machine operators do not have access to the complete systems manual. 
D)  Machine operators are supervised by the programmer.

Question 7

For good internal control, programmers should not be given access to complete program documentation for the programs they work on.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not programmed as a processing control?

Accepted Answer

A)  Private lines. 
B)  Validity tests. 
C)  Self-checking numbers. 
D)  Limit tests. 
A)  Private lines. 
B)  Validity tests. 
C)  Self-checking numbers. 
D)  Limit tests.

Question 9

Data encryption is an example of data transmission control.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is most likely to include user group development and execution of certain computer applications?

Accepted Answer

A)  Telecommunication transmission systems. 
B)  Database administration. 
C)  End user computing. 
D)  Electronic data interchange systems. 
A)  Telecommunication transmission systems. 
B)  Database administration. 
C)  End user computing. 
D)  Electronic data interchange systems.

Question 11

When erroneous data are detected by computer program controls, such data may be excluded from processing and printed on an exception report. The exception report should most probably be reviewed and followed up on by the:

Accepted Answer

A)  Supervisor of computer operations. 
B)  Systems analyst. 
C)  Data control group. 
D)  Computer programmer. 
A)  Supervisor of computer operations. 
B)  Systems analyst. 
C)  Data control group. 
D)  Computer programmer.

Question 12

Which of the following testing techniques is more commonly used by internal auditors than by independent auditors?

Accepted Answer

A)  Integrated test facilities. 
B)  Test data. 
C)  Controlled programs. 
D)  Tagging and tracing transactions. 
A)  Integrated test facilities. 
B)  Test data. 
C)  Controlled programs. 
D)  Tagging and tracing transactions.

Question 13

Auditing through the computer is most likely to be used when:

Accepted Answer

A)  Input transactions are batched and system logic is straightforward. 
B)  Processing primarily consists of sorting the input data and updating the master file sequentially. 
C)  Processing is primarily online and updating is real-time. 
D)  Outputs are in hard copy form. 
A)  Input transactions are batched and system logic is straightforward. 
B)  Processing primarily consists of sorting the input data and updating the master file sequentially. 
C)  Processing is primarily online and updating is real-time. 
D)  Outputs are in hard copy form.

Question 14

When conducting fieldwork for a physical inventory, an auditor cannot perform which of the following steps using a generalized audit software package?

Accepted Answer

A)  Observing inventory. 
B)  Selecting sample items of inventory. 
C)  Analyzing data resulting from inventory. 
D)  Recalculating balances in inventory reports. 
A)  Observing inventory. 
B)  Selecting sample items of inventory. 
C)  Analyzing data resulting from inventory. 
D)  Recalculating balances in inventory reports.

Question 15

Magnetic tape drives have the advantage of direct access to stored data.

Accepted Answer

A) True 
 B)False

Question 16

In the weekly computer run to prepare payroll checks, a check was printed for an employee who had been terminated the previous week. Which of the following controls, if properly utilized, would have been most effective in preventing the error or ensuing its prompt detection?

Accepted Answer

A)  A control total for hours worked, prepared from time cards collected by the timekeeping department. 
B)  Requiring the treasurer's office to account for the numbers of the prenumbered checks issued to the computer department for the processing of the payroll. 
C)  Use of a check digit for employee numbers. 
D)  Use of a header label for the payroll input sheet. 
A)  A control total for hours worked, prepared from time cards collected by the timekeeping department. 
B)  Requiring the treasurer's office to account for the numbers of the prenumbered checks issued to the computer department for the processing of the payroll. 
C)  Use of a check digit for employee numbers. 
D)  Use of a header label for the payroll input sheet.

Question 17

Auditing by testing the input and output of a computer system instead of the computer program itself will:

Accepted Answer

A)  Not detect program errors which do not show up in the output sampled. 
B)  Detect all program errors, regardless of the nature of the output. 
C)  Provide the auditors with the same type of evidence. 
D)  Not provide the auditors with the confidence in the results of the auditing procedures. 
A)  Not detect program errors which do not show up in the output sampled. 
B)  Detect all program errors, regardless of the nature of the output. 
C)  Provide the auditors with the same type of evidence. 
D)  Not provide the auditors with the confidence in the results of the auditing procedures.

Question 18

Which of the following is not a data transmission control?

Accepted Answer

A)  Echo checks. 
B)  Data encryption. 
C)  File labels. 
D)  Parity checks. 
A)  Echo checks. 
B)  Data encryption. 
C)  File labels. 
D)  Parity checks.

Question 19

For auxiliary storage when the computer is operating, personal computers use hard disk drives.

Accepted Answer

A) True 
 B)False

Question 20

A system in which the end user is responsible for the development and execution of the computer application that he or she uses is referred to as:

Accepted Answer

A)  Laptop computing. 
B)  End user computing. 
C)  Distributed computing. 
D)  Decentralized computing. 
A)  Laptop computing. 
B)  End user computing. 
C)  Distributed computing. 
D)  Decentralized computing.

Exam 8: Consideration of Internal Control in an Information Technology Environment

A problem for a CPA associated with advanced IT systems is that:

Passwords for microcomputer software programs are designed to prevent:

Which of the following is least likely to be a general control over computer activities?

An auditor may decide not to perform tests of controls related to the control activities within the computer portion of the client's internal control. Which of the following would not be a valid reason for choosing to omit such test?

If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll computer application?

Which of the following constitutes a weakness in the internal control of a computer system?

For good internal control, programmers should not be given access to complete program documentation for the programs they work on.

Which of the following is not programmed as a processing control?

Data encryption is an example of data transmission control.

Which of the following is most likely to include user group development and execution of certain computer applications?

When erroneous data are detected by computer program controls, such data may be excluded from processing and printed on an exception report. The exception report should most probably be reviewed and followed up on by the:

Which of the following testing techniques is more commonly used by internal auditors than by independent auditors?

Auditing through the computer is most likely to be used when:

When conducting fieldwork for a physical inventory, an auditor cannot perform which of the following steps using a generalized audit software package?

Magnetic tape drives have the advantage of direct access to stored data.

In the weekly computer run to prepare payroll checks, a check was printed for an employee who had been terminated the previous week. Which of the following controls, if properly utilized, would have been most effective in preventing the error or ensuing its prompt detection?

Auditing by testing the input and output of a computer system instead of the computer program itself will:

Which of the following is not a data transmission control?

For auxiliary storage when the computer is operating, personal computers use hard disk drives.

A system in which the end user is responsible for the development and execution of the computer application that he or she uses is referred to as:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Planning the Audit; Linking Audit Procedures to Risk

Internal Control

Audit Sampling

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property, Plant, and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

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