Question 1

Output controls need to be designed for which of the following data integrity objectives?

Accepted Answer

A) Detecting errors after the processing is completed 
B) Preventing errors before the processing is completed 
C) Detecting errors in the general ledger adjustment process 
D) Preventing errors in separation of duties for IT personnel 
A) Detecting errors after the processing is completed 
B) Preventing errors before the processing is completed 
C) Detecting errors in the general ledger adjustment process 
D) Preventing errors in separation of duties for IT personnel A

Question 2

Define control for general controls and application controls.Also list the categories of controls included under general controls and application controls.

Accepted Answer

General controls are those that relate to all aspects of the IT function.They include controls related to administration, separation of IT duties, systems development, physical and on-line security, backup and contingency planning, and hardware controls.
Application controls relate to the processing of individual transactions.Application controls are specific to certain software applications and typically do not affect all IT functions.They include input controls, processing controls, and output controls.

Question 3

Auditors normally link controls and deficiencies in general controls to specific transaction-related audit objectives.

Accepted Answer

A) True 
 B)False  False

Question 4

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

Accepted Answer

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

Question 5

When purchasing software or developing in-house software:

Accepted Answer

A) cost should be the only factor. 
B) extensive testing of the software is generally not required. 
C) a team of both IT and non-IT personnel should be involved in the decision process. 
D) the librarian and the IT manager should be the only ones involved in the decision process. 
A) cost should be the only factor. 
B) extensive testing of the software is generally not required. 
C) a team of both IT and non-IT personnel should be involved in the decision process. 
D) the librarian and the IT manager should be the only ones involved in the decision process.

Question 6

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

Accepted Answer

Application controls fall into three cat

Question 7

Processing controls include the following tests:
Validation
Sequence
Data Reasonableness
Completeness
Describe what each control is designed to do:

Accepted Answer

Validation: ensures that a particular ty

Question 8

Companies with non-complex IT environments often rely on desktops and networked servers to perform accounting system functions.Which of the following is not an audit consideration in such an environment?

Accepted Answer

A) Limited reliance on automated controls 
B) Unauthorized access to master files 
C) Vulnerability to viruses and other risks 
D) Excess reliance on automated controls 
A) Limited reliance on automated controls 
B) Unauthorized access to master files 
C) Vulnerability to viruses and other risks 
D) Excess reliance on automated controls

Question 9

The auditor's objective in determining whether the client's automated controls can correctly handle valid and invalid transactions as they arise is accomplished through the:

Accepted Answer

A) test data approach. 
B) generalized audit software approach. 
C) microcomputer-aided auditing approach. 
D) generally accepted auditing standards. 
A) test data approach. 
B) generalized audit software approach. 
C) microcomputer-aided auditing approach. 
D) generally accepted auditing standards.

Question 10

What are three specific risks to IT systems?

Accepted Answer

The three specific risks to IT

Question 11

Describe three computer auditing techniques available to the auditor.

Accepted Answer

Computer auditing techniques available t

Question 12

Computers process information consistently for all transactions.This creates a risk that:

Accepted Answer

A) auditors will not be able to access data quickly. 
B) auditors will not be able to determine if data is processed consistently. 
C) erroneous processing can result in the accumulation of a great number of misstatements in a short period of time. 
D) all of the above. 
A) auditors will not be able to access data quickly. 
B) auditors will not be able to determine if data is processed consistently. 
C) erroneous processing can result in the accumulation of a great number of misstatements in a short period of time. 
D) all of the above.

Question 13

Many clients have outsourced their IT functions.The difficulty the independent auditor faces when a computer service center is used is to:

Accepted Answer

A) gain the permission of the service center to review their work. 
B) find compatible programs that will analyze the service center's programs. 
C) determine the adequacy of the service center's internal controls. 
D) try to abide by the Code of Professional Conduct to maintain the security and confidentiality of client's data. 
A) gain the permission of the service center to review their work. 
B) find compatible programs that will analyze the service center's programs. 
C) determine the adequacy of the service center's internal controls. 
D) try to abide by the Code of Professional Conduct to maintain the security and confidentiality of client's data.

Question 14

A service center:

Accepted Answer

A) must have an auditor hired by the PCAOB test the controls of the service center. 
B) audit cannot be relied upon by those outside of the firm. 
C) can engage a CPA firm to issue a report on their internal controls for use by all customers and their independent auditors. 
D) must make all of their systems available to any external party. 
A) must have an auditor hired by the PCAOB test the controls of the service center. 
B) audit cannot be relied upon by those outside of the firm. 
C) can engage a CPA firm to issue a report on their internal controls for use by all customers and their independent auditors. 
D) must make all of their systems available to any external party.

Question 15

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 16

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 17

Generalized audit software is used to test automated controls.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements related to application controls is correct?

Accepted Answer

A) Application controls relate to various aspects of the IT function including software acquisition and the processing of transactions. 
B) Application controls relate to various aspects of the IT function including physical security and the processing of transactions in various cycles. 
C) Application controls relate to all aspects of the IT function. 
D) Application controls relate to the processing of individual transactions. 
A) Application controls relate to various aspects of the IT function including software acquisition and the processing of transactions. 
B) Application controls relate to various aspects of the IT function including physical security and the processing of transactions in various cycles. 
C) Application controls relate to all aspects of the IT function. 
D) Application controls relate to the processing of individual transactions.

Question 19

Which of the following is not a general control?

Accepted Answer

A) Separation of IT duties 
B) Systems development 
C) Processing controls 
D) Hardware controls 
A) Separation of IT duties 
B) Systems development 
C) Processing controls 
D) Hardware controls

Question 20

Auditors typically obtain information about general and application controls through all of the following ways except for:

Accepted Answer

A) interviews with IT personnel. 
B) reviews of detailed questionnaires completed by IT staff. 
C) examination of system documentation such as flowcharts. 
D) filings submitted to the PCAOB or SEC. 
A) interviews with IT personnel. 
B) reviews of detailed questionnaires completed by IT staff. 
C) examination of system documentation such as flowcharts. 
D) filings submitted to the PCAOB or SEC.

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

Output controls need to be designed for which of the following data integrity objectives?

Define control for general controls and application controls.Also list the categories of controls included under general controls and application controls.

Auditors normally link controls and deficiencies in general controls to specific transaction-related audit objectives.

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

When purchasing software or developing in-house software:

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

Processing controls include the following tests: Validation Sequence Data Reasonableness Completeness Describe what each control is designed to do:

Companies with non-complex IT environments often rely on desktops and networked servers to perform accounting system functions.Which of the following is not an audit consideration in such an environment?

The auditor's objective in determining whether the client's automated controls can correctly handle valid and invalid transactions as they arise is accomplished through the:

What are three specific risks to IT systems?

Describe three computer auditing techniques available to the auditor.

Computers process information consistently for all transactions.This creates a risk that:

Many clients have outsourced their IT functions.The difficulty the independent auditor faces when a computer service center is used is to:

A service center:

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

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

Generalized audit software is used to test automated controls.

Which of the following statements related to application controls is correct?

Which of the following is not a general control?

Auditors typically obtain information about general and application controls through all of the following ways except for:

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

Overall Audit Strategy 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 of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, 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 and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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