Question 1

Decision makers are typically forced to rely on others for information.When the source of the information is removed from the decision maker, the information stands a greater chance of being misstated.A decision maker may become detached from the source of information due to geography, organizational layers, or other factors.This describes which cause of information risk?

Accepted Answer

A) The lack of CPA independence 
B) The volume and complexity of underlying data 
C) The motive of the preparer 
D) The remoteness of information

Question 2

Auditors do not need to concern themselves with risks unless there is an indication that there is an internal control weakness.

Accepted Answer

A) True 
 B)False

Question 3

Which management assertion determines that transactions and related asset accounts balances are actually owned and that liability account balances represent actual obligations?

Accepted Answer

A) Valuation and Allocation 
B) Existence 
C) Rights and Obligations 
D) Classification and Presentation

Question 4

Accounting services that improve the quality of information provided to the decision maker, an audit being the most common type of this service, is called:

Accepted Answer

A) Compliance Services 
B) Assurance Services 
C) Substantive Services 
D) Operational Services

Question 5

This type of audit is completed in order to determine whether a company has adhered to the regulations and policies established by contractual agreements, governmental agencies, or some other high authority.

Accepted Answer

A) Compliance Audit 
B) Operational Audit 
C) Information Audit 
D) Financial Statement Audit

Question 6

This type of processing control test involves a comparison of different items that are expected to have the same values, such as comparing two batches or comparing actual data against a predetermined control total.

Accepted Answer

A) Validation Checks 
B) Batch Totals 
C) Run-to-Run Totals 
D) Balancing Tests

Question 7

The automated controls that affect all computer applications are referred to as:

Accepted Answer

A) General Controls 
B) Specific Controls 
C) Input Controls 
D) Application Controls

Question 8

All types of auditors must follow guidelines promoting ethical conduct.For financial statement auditors, the PCAOB/AICPA has established a Code of Professional Conduct, commonly called the Code of Ethics, which consists of two sections.Which of the following correctly states the two sections?

Accepted Answer

A) Integrity and responsibility 
B) Principles and rules 
C) Objectivity and independence 
D) Scope and nature

Question 9

Financial statement audits are required to be performed by:

Accepted Answer

A) Governmental Auditors 
B) CPAs 
C) Internal Auditors 
D) IT Auditors

Question 10

The general guidelines, known as the generally accepted auditing standards, which include the concepts of adequate planning and supervision, internal control, and evidence relate to the:

Accepted Answer

A) General Standards 
B) Operating Standards 
C) Fieldwork Standards 
D) Reporting Standards

Question 11

The remoteness of information, one of the causes of information risk, can relate to geographic distance or organizational layers.

Accepted Answer

A) True 
 B)False

Question 12

The general guidelines, known as the generally accepted auditing standards, which include the concepts of presentation in accordance with the established criteria, the consistent application of established principles, adequate disclosure, and the expression of an opinion, relate to the:

Accepted Answer

A) General Standards 
B) Operating Standards 
C) Fieldwork Standards 
D) Reporting Standards

Question 13

These tests of the security controls involve various methods of entering the company's system to determine whether controls are working as intended.

Accepted Answer

A) Authenticity tests 
B) Penetration tests 
C) Vulnerability assessments 
D) IT systems documentation

Question 14

When a client changes the type of hardware or software used or in other ways modifies its IT environment, the auditors need to test only the new system in order to determine the effectiveness of the controls.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a general control to test for external access to a client's computerized systems?

Accepted Answer

A) Penetration tests 
B) Hash totals 
C) Field checks 
D) Program tracing

Question 16

The IT environment plays a key role in how auditors conduct their work in all but which of the following areas:

Accepted Answer

A) Consideration of Risk 
B) Consideration of Information Fairness 
C) Design and Performance of Audit Tests 
D) Audit Procedures Used

Question 17

IT auditors may need to be called in to:

Accepted Answer

A) Consider the effects of computer processing on the audit. 
B) To assist in testing the automated processes. 
C) Both of the above. 
D) None of the above.

Question 18

The most common method for decision makers to reduce information risk is to rely on information that has been audited by an independent party.

Accepted Answer

A) True 
 B)False

Question 19

This organization issues guidelines for conducting the IT audit.The standards issued address practices related to control and security of the IT system.

Accepted Answer

A) Auditing Standards Board 
B) Public Company Accounting Oversight Board 
C) International Audit Practices Committee 
D) Information Systems Audit and Control Association

Question 20

Which of the following is not considered a cause for information risk?

Accepted Answer

A) Management's geographic location is far from the source of the information needed to make effective decisions. 
B) The information is collected and prepared by persons who use the information for very different purposes. 
C) The information relates to business activities that are not well understood by those who collect and summarize the information for decision makers. 
D) The information has been tested by internal auditors and a CPA firm.

Exam 7: Auditing Information Technology Bases Processes

Auditors do not need to concern themselves with risks unless there is an indication that there is an internal control weakness.

Which management assertion determines that transactions and related asset accounts balances are actually owned and that liability account balances represent actual obligations?

Accounting services that improve the quality of information provided to the decision maker, an audit being the most common type of this service, is called:

This type of audit is completed in order to determine whether a company has adhered to the regulations and policies established by contractual agreements, governmental agencies, or some other high authority.

This type of processing control test involves a comparison of different items that are expected to have the same values, such as comparing two batches or comparing actual data against a predetermined control total.

The automated controls that affect all computer applications are referred to as:

All types of auditors must follow guidelines promoting ethical conduct.For financial statement auditors, the PCAOB/AICPA has established a Code of Professional Conduct, commonly called the Code of Ethics, which consists of two sections.Which of the following correctly states the two sections?

Financial statement audits are required to be performed by:

The general guidelines, known as the generally accepted auditing standards, which include the concepts of adequate planning and supervision, internal control, and evidence relate to the:

The remoteness of information, one of the causes of information risk, can relate to geographic distance or organizational layers.

The general guidelines, known as the generally accepted auditing standards, which include the concepts of presentation in accordance with the established criteria, the consistent application of established principles, adequate disclosure, and the expression of an opinion, relate to the:

These tests of the security controls involve various methods of entering the company's system to determine whether controls are working as intended.

When a client changes the type of hardware or software used or in other ways modifies its IT environment, the auditors need to test only the new system in order to determine the effectiveness of the controls.

Which of the following is a general control to test for external access to a client's computerized systems?

The IT environment plays a key role in how auditors conduct their work in all but which of the following areas:

IT auditors may need to be called in to:

The most common method for decision makers to reduce information risk is to rely on information that has been audited by an independent party.

This organization issues guidelines for conducting the IT audit.The standards issued address practices related to control and security of the IT system.

Which of the following is not considered a cause for information risk?