Question 1

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 2

A site is allowed to retain the Webtrust seal if the auditor monitors compliance at least every:

Accepted Answer

A)  120 days. 
B)  60 days. 
C)  30 days. 
D)  90 days.

Question 3

Which one of the following statements is incorrect about network environments?

Accepted Answer

A)  Decentralised servers often increase control risk. 
B)  Many environments lack standardised procedures. 
C)  Responsibility for purchasing equipment usually resides with a centralised IT function. 
D)  Network- related software often lacks the security features typically available in traditionally centralised systems.

Question 4

Provide five examples of different IT environments the auditor may encounter.

Accepted Answer

The answer of Provide five examples of different IT environments...

Question 5

General controls in smaller companies are usually less effective than in more complex IT environments.

Accepted Answer

A) True 
 B)False

Question 6

In database management systems, each application contains its own data file whereas in non- database environments, many applications share files.

Accepted Answer

A) True 
 B)False

Question 7

A key to successful software purchase decisions involves:

Accepted Answer

A)  IT and non- IT personnel. 
B)  internal auditors. 
C)  key users of the software. 
D)  all of the above

Question 8

General controls are normally evaluated earlier in the audit than application controls.

Accepted Answer

A) True 
 B)False

Question 9

The auditor can perform many different kinds of tests and other functions with the auditor's computer program. Which of the following tests or functions CANNOT be performed?

Accepted Answer

A)  Verify extensions and footings. 
B)  Analyse exception responses returned with confirmations received from customers. 
C)  Compare data on separate files. 
D)  Re- sequence data and perform analyses.

Question 10

A firewall is a system of hardware and software that monitors and controls the flow of e- commerce communications by channelling all network connections through a control gateway.

Accepted Answer

A) True 
 B)False

Question 11

The focus of output controls is to:

Accepted Answer

A)  detect errors after the completion of processing. 
B)  confirm that data has been processed in the correct order. 
C)  check the accuracy of processing. 
D)  prevent errors before final reports are completed.

Question 12

Auditing standards describe which two broad control groupings for IT systems? 1. General controls
2) Application controls
3) Information controls
4) Performance controls

Accepted Answer

A)  2 and 3 
B)  1 and 3 
C)  1 and 2 
D)  3 and 4

Question 13

If the general control environment is weak:

Accepted Answer

A)  auditing through the computer is usually the most cost- effective audit approach. 
B)  the auditor will need to rely more on application controls and increase testing of these. 
C)  this tends to have a pervasive effect on the application control environment. 
D)  all of the above

Question 14

Companies decide whether to outsource IT based on auditor judgement.

Accepted Answer

A) True 
 B)False

Question 15

A computer service centre processes, for an auditor's client, financial data that has a material effect on that client's financial statements. The independent auditor need NOT consider a review of the service centre controls if:

Accepted Answer

A)  he or she is satisfied that a special report on internal controls issued by the service centre's independent auditor can be relied on to the extent desired. 
B)  the service centre is a partially owned subsidiary of the client company, whose financial statements are examined by another audit firm. 
C)  the service centre processes data exclusively for the audit client and its subsidiaries. 
D)  the service centre controls have already been reviewed by the internal audit team of the client.

Question 16

Auditing through the computer is justified when general controls are acceptable.

Accepted Answer

A) True 
 B)False

Question 17

Auditing around the computer is acceptable if the auditor has access to sufficient source documents and a detailed listing of output in a readable form.

Accepted Answer

A) True 
 B)False

Question 18

Generalised audit software:

Accepted Answer

A)  is a method of verifying the client's data which is recorded in a machine language. 
B)  is used when client's software is not compatible with the auditor's. 
C)  is often used even when client's data are not computerised. 
D)  can be used for all three of the above.

Question 19

Well- controlled organisations segregate key duties within IT. Ideally, this means the following responsibilities should be separated:

Accepted Answer

A)  IT management separate from operations. 
B)  IT management separate from data control. 
C)  IT management separate from systems development. 
D)  All of the above

Question 20

In IT systems, if general controls are effective, it increases the auditor's ability to rely on application controls to reduce control risk.

Accepted Answer

A) True 
 B)False

Exam 10: The Impact of Information Technology on the Audit Process

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

A site is allowed to retain the Webtrust seal if the auditor monitors compliance at least every:

Which one of the following statements is incorrect about network environments?

Provide five examples of different IT environments the auditor may encounter.

General controls in smaller companies are usually less effective than in more complex IT environments.

In database management systems, each application contains its own data file whereas in non- database environments, many applications share files.

A key to successful software purchase decisions involves:

General controls are normally evaluated earlier in the audit than application controls.

The auditor can perform many different kinds of tests and other functions with the auditor's computer program. Which of the following tests or functions CANNOT be performed?

A firewall is a system of hardware and software that monitors and controls the flow of e- commerce communications by channelling all network connections through a control gateway.

The focus of output controls is to:

Auditing standards describe which two broad control groupings for IT systems? 1. General controls 2) Application controls 3) Information controls 4) Performance controls

If the general control environment is weak:

Companies decide whether to outsource IT based on auditor judgement.

A computer service centre processes, for an auditor's client, financial data that has a material effect on that client's financial statements. The independent auditor need NOT consider a review of the service centre controls if:

Auditing through the computer is justified when general controls are acceptable.

Auditing around the computer is acceptable if the auditor has access to sufficient source documents and a detailed listing of output in a readable form.

Generalised audit software:

Well- controlled organisations segregate key duties within IT. Ideally, this means the following responsibilities should be separated:

In IT systems, if general controls are effective, it increases the auditor's ability to rely on application controls to reduce control risk.