Question 1

Which of the following controls prevent and detect errors while transaction data are processed?

Accepted Answer

A)  Software 
B)  Application 
C)  Processing 
D)  Transaction 
A)  Software 
B)  Application 
C)  Processing 
D)  Transaction

Question 2

Which of the following is not a risk in an IT system?

Accepted Answer

A)  need for IT experienced staff 
B)  separation of IT duties from accounting functions 
C)  improved audit trail 
D)  hardware and data vulnerability 
A)  need for IT experienced staff 
B)  separation of IT duties from accounting functions 
C)  improved audit trail 
D)  hardware and data vulnerability

Question 3

What tools do companies use to limit access to sensitive company data?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 4

Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following audit procedures used to obtain an understanding of the client's general controls would the auditor use to identify program changes in application software?

Accepted Answer

A)  interviews with IT personnel 
B)  examination of system documentation 
C)  reviews of detailed questionnaires completed by the IT staff 
D)  review of the client's IT architecture 
A)  interviews with IT personnel 
B)  examination of system documentation 
C)  reviews of detailed questionnaires completed by the IT staff 
D)  review of the client's IT architecture

Question 6

The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client's data recorded in a machine language is:

Accepted Answer

A)  the test data approach. 
B)  called auditing around the computer. 
C)  the generalized audit software approach. 
D)  the microcomputer-aided auditing approach. 
A)  the test data approach. 
B)  called auditing around the computer. 
C)  the generalized audit software approach. 
D)  the microcomputer-aided auditing approach.

Question 7

"Auditing around the computer" is acceptable only if the auditor has access to the client's data in a machine-readable language.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following tests determines that every field in a record has been completed?

Accepted Answer

A)  Validation 
B)  Sequence 
C)  Completeness 
D)  Programming 
A)  Validation 
B)  Sequence 
C)  Completeness 
D)  Programming

Question 9

Which of the following is not a benefit of using IT-based controls?

Accepted Answer

A)  ability to process large volumes of transactions 
B)  ability to replace manual controls with computer-based controls 
C)  reduction in misstatements due to consistent processing of transactions 
D)  reduction in internal control evaluation in setting control risk 
A)  ability to process large volumes of transactions 
B)  ability to replace manual controls with computer-based controls 
C)  reduction in misstatements due to consistent processing of transactions 
D)  reduction in internal control evaluation in setting control risk

Question 10

Which of the following is a component of general controls?

Accepted Answer

A)  processing controls 
B)  output controls 
C)  back-up and contingency planning 
D)  input controls 
A)  processing controls 
B)  output controls 
C)  back-up and contingency planning 
D)  input controls

Question 11

"Auditing around the computer" is most appropriate when the client has not maintained detailed output or source documents in a form readable by humans.

Accepted Answer

A) True 
 B)False

Question 12

Discuss how the integration of IT into accounting systems enhances internal control.

Accepted Answer

Enhancements to internal control resulti

Question 13

Which of the following is a significant risk to the auditor regarding an audit in a highly automated information environment?

Accepted Answer

A)  does not place enough reliance on the processed information 
B)  places too much reliance on the processed information 
C)  processed information may not reveal the sources of the information 
D)  does not understand the processed information produced by the automated environment 
A)  does not place enough reliance on the processed information 
B)  places too much reliance on the processed information 
C)  processed information may not reveal the sources of the information 
D)  does not understand the processed information produced by the automated environment

Question 14

Processing controls is a category of application controls.

Accepted Answer

A) True 
 B)False

Question 15

Parallel testing is used when old and new systems are operated simultaneously in all locations.

Accepted Answer

A) True 
 B)False

Question 16

To determine that user ID and password controls are functioning, an auditor would most likely:

Accepted Answer

A)  test the system by attempting to sign on using invalid user identifications and passwords. 
B)  write a computer program that simulates the logic of the client's access control software. 
C)  extract a random sample of processed transactions and ensure that the transactions were appropriately authorized. 
D)  examine statements signed by employees stating that they have not divulged their user identifications and passwords to any other person. 
A)  test the system by attempting to sign on using invalid user identifications and passwords. 
B)  write a computer program that simulates the logic of the client's access control software. 
C)  extract a random sample of processed transactions and ensure that the transactions were appropriately authorized. 
D)  examine statements signed by employees stating that they have not divulged their user identifications and passwords to any other person.

Question 17

When IT programs or files can be accessed from terminals, users should be required to enter a(n):

Accepted Answer

A)  echo check. 
B)  parity check. 
C)  self-diagnosis test. 
D)  authorized password. 
A)  echo check. 
B)  parity check. 
C)  self-diagnosis test. 
D)  authorized password.

Question 18

Programmers should do all but which of the following?

Accepted Answer

A)  Test programs for proper performance. 
B)  Evaluate representational faithfulness of transaction data input. 
C)  Develop flowcharts for new applications. 
D)  Programmers should perform each of the above. 
A)  Test programs for proper performance. 
B)  Evaluate representational faithfulness of transaction data input. 
C)  Develop flowcharts for new applications. 
D)  Programmers should perform each of the above.

Question 19

The most important output control is:

Accepted Answer

A)  distribution control, which assures that only authorized personnel receive the reports generated by the system. 
B)  review of data for reasonableness by someone who knows what the output should look like. 
C)  control totals, which are used to verify that the computer's results are correct. 
D)  logic tests, which verify that no mistakes were made in processing. 
A)  distribution control, which assures that only authorized personnel receive the reports generated by the system. 
B)  review of data for reasonableness by someone who knows what the output should look like. 
C)  control totals, which are used to verify that the computer's results are correct. 
D)  logic tests, which verify that no mistakes were made in processing.

Question 20

Discuss the advantages and benefits of using generalized audit software.

Accepted Answer

Advantages and benefits of using general

Exam 12: The Impact of Information Technology on the Audit Process

Which of the following controls prevent and detect errors while transaction data are processed?

Which of the following is not a risk in an IT system?

What tools do companies use to limit access to sensitive company data?

Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls.

Which of the following audit procedures used to obtain an understanding of the client's general controls would the auditor use to identify program changes in application software?

The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client's data recorded in a machine language is:

"Auditing around the computer" is acceptable only if the auditor has access to the client's data in a machine-readable language.

Which of the following tests determines that every field in a record has been completed?

Which of the following is not a benefit of using IT-based controls?

Which of the following is a component of general controls?

"Auditing around the computer" is most appropriate when the client has not maintained detailed output or source documents in a form readable by humans.

Discuss how the integration of IT into accounting systems enhances internal control.

Which of the following is a significant risk to the auditor regarding an audit in a highly automated information environment?

Processing controls is a category of application controls.

Parallel testing is used when old and new systems are operated simultaneously in all locations.

To determine that user ID and password controls are functioning, an auditor would most likely:

When IT programs or files can be accessed from terminals, users should be required to enter a(n):

Programmers should do all but which of the following?

The most important output control is:

Discuss the advantages and benefits of using generalized audit software.

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

The CPA Profession

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of Internal Control and Control Risk

Fraud Auditing

Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details and Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls and Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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