Question 1

The objective of the computer audit technique known as the 'test data approach' is to determine whether the client's computer programs can correctly process valid and invalid transactions.

Accepted Answer

A) True 
 B)False

Question 2

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

Accepted Answer

The answer of Discuss the four areas of responsibility under...

Question 3

The major disadvantage of generalised audit software is that its complexity limits its use primarily to IT specialists.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following are key to a successful software purchase decision?

Accepted Answer

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

Question 5

Application controls vary with each application in the IT system.In attempting to review and gain an understanding of the internal control system, the auditor must evaluate the application controls for every:

Accepted Answer

A)  audit area in which the client uses the computer. 
B)  material audit area. 
C)  audit area. 
D)  audit area where the auditor plans to reduce assessed control risk.

Question 6

Using the test data approach, the auditor processes a set of the client's actual transaction data using the auditor's computer programs on the auditor's computer equipment to determine whether the client's computer programs and equipment are processing data correctly.

Accepted Answer

A) True 
 B)False

Question 7

Processing controls is a category of general controls.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

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

Question 9

Internal control is ineffective when computer programmers:

Accepted Answer

A)  request physical security be provided for program files. 
B)  design documentation for computerised systems. 
C)  have access to actual programs used to produce accounting information. 
D)  participate in computer software acquisition decisions.

Question 10

After obtaining an understanding of IT internal control, if the auditor feels that control risk cannot be reduced, he or she will

Accepted Answer

A)  expand the substantive testing portion of the audit. 
B)  issue a disclaimer. 
C)  issue an adverse opinion. 
D)  increase the sample size for tests of controls.

Question 11

Describe four common audit tasks that can be simplified by the use of microcomputers in practice.

Accepted Answer

The answer of Describe four common audit tasks that can...

Question 12

Identify the three categories of application controls and give one example of each.

Accepted Answer

The answer of Identify the three categories of application controls...

Question 13

Tests of controls are normally performed only if the auditor believes the client's internal control may be effective.

Accepted Answer

A) True 
 B)False

Question 14

IT controls are classified as either general or application controls.

Accepted Answer

A) True 
 B)False

Question 15

Auditing around the computer:

Accepted Answer

A)  considers only the non-IT controls in assessing control risk. 
B)  uses the client's computer as an audit tool. 
C)  uses computer programs to perform audit tasks in special circumstances. 
D)  all of the above

Question 16

Many clients have their data processed at an independent computer service centre (IT outsourcing).The difficulty the independent auditor faces when a computer service centre is used lies in:

Accepted Answer

A)  finding compatible programs that will analyse the service centre's programs. 
B)  determining the adequacy of the service centre's internal controls. 
C)  gaining the permission of the service centre to review its work. 
D)  trying to abide by the Code of Ethics for Professional Accountants to maintain the security and confidentiality of the client's data.

Question 17

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

Question 18

Pre-designed formats for audit working papers and letters can be created and saved using both electronic spreadsheets and word processors.These are called:

Accepted Answer

A)  audit software. 
B)  macros. 
C)  desktop publishing. 
D)  templates.

Question 19

Control risk is often affected by a complex IT system even if it enhances internal controls.

Accepted Answer

A) True 
 B)False

Question 20

To obtain evidence that all external users in an e-commerce system are authorised, a 'firewall' channels all network connections through a:

Accepted Answer

A)  single computer monitor. 
B)  single telephone line. 
C)  separate computer service bureau. 
D)  control gateway.

Exam 10: The impact of information technology on the audit process

The objective of the computer audit technique known as the 'test data approach' is to determine whether the client's computer programs can correctly process valid and invalid transactions.

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

The major disadvantage of generalised audit software is that its complexity limits its use primarily to IT specialists.

Which of the following are key to a successful software purchase decision?

Application controls vary with each application in the IT system.In attempting to review and gain an understanding of the internal control system, the auditor must evaluate the application controls for every:

Using the test data approach, the auditor processes a set of the client's actual transaction data using the auditor's computer programs on the auditor's computer equipment to determine whether the client's computer programs and equipment are processing data correctly.

Processing controls is a category of general controls.

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

Internal control is ineffective when computer programmers:

After obtaining an understanding of IT internal control, if the auditor feels that control risk cannot be reduced, he or she will

Describe four common audit tasks that can be simplified by the use of microcomputers in practice.

Identify the three categories of application controls and give one example of each.

Tests of controls are normally performed only if the auditor believes the client's internal control may be effective.

IT controls are classified as either general or application controls.

Auditing around the computer:

Many clients have their data processed at an independent computer service centre (IT outsourcing) .The difficulty the independent auditor faces when a computer service centre is used lies in:

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

Pre-designed formats for audit working papers and letters can be created and saved using both electronic spreadsheets and word processors.These are called:

Control risk is often affected by a complex IT system even if it enhances internal controls.

To obtain evidence that all external users in an e-commerce system are authorised, a 'firewall' channels all network connections through a: