Question 1

LANs link equipment within a single or small cluster of buildings and are used within a company .

Accepted Answer

A) True 
 B)False

Question 2

A database management system:

Accepted Answer

A) allows clients to create databases that include information that can be shared across multiple applications. 
B) stores data on different files for different purposes, but always knows where they are and how to retrieve them. 
C) allows quick retrieval of data, but at a cost of inefficient use of file space. 
D) allows quick retrieval of data, but it needs to update files continually. 
A) allows clients to create databases that include information that can be shared across multiple applications. 
B) stores data on different files for different purposes, but always knows where they are and how to retrieve them. 
C) allows quick retrieval of data, but at a cost of inefficient use of file space. 
D) allows quick retrieval of data, but it needs to update files continually.

Question 3

Controls which are designed to assure that the information processed by the computer is authorized, complete, and accurate are called:

Accepted Answer

A) input controls. 
B) processing controls. 
C) output controls. 
D) general controls. 
A) input controls. 
B) processing controls. 
C) output controls. 
D) general controls.

Question 4

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 5

Which of the following is a correct statement regarding general controls?

Accepted Answer

A) Auditors should evaluate the effectiveness of application controls before evaluating general controls. 
B) General controls have a pervasive effect on the effectiveness of application controls. 
C) Ineffective general controls have no impact on the potential for material misstatements across all system applications. 
D) General controls have no impact on audit testing. 
A) Auditors should evaluate the effectiveness of application controls before evaluating general controls. 
B) General controls have a pervasive effect on the effectiveness of application controls. 
C) Ineffective general controls have no impact on the potential for material misstatements across all system applications. 
D) General controls have no impact on audit testing.

Question 6

Which of the following is least likely to be used in obtaining an understanding of client general controls?

Accepted Answer

A) Examination of system documentation 
B) Inquiry of key users 
C) Walk through of a sales transaction 
D) Reviews of questionnaires completed by client IT personnel 
A) Examination of system documentation 
B) Inquiry of key users 
C) Walk through of a sales transaction 
D) Reviews of questionnaires completed by client IT personnel

Question 7

Which of the following best describes the test data approach?

Accepted Answer

A) Auditors process their own test data using the client's computer system and application program. 
B) Auditors process their own test data using their own computers that simulate the client's computer system. 
C) Auditors use auditor-controlled software to do the same operations that the client's software does, using the same data files. 
D) Auditors use client-controlled software to do the same operations that the client's software does, using auditor created data files. 
A) Auditors process their own test data using the client's computer system and application program. 
B) Auditors process their own test data using their own computers that simulate the client's computer system. 
C) Auditors use auditor-controlled software to do the same operations that the client's software does, using the same data files. 
D) Auditors use client-controlled software to do the same operations that the client's software does, using auditor created data files.

Question 8

What do auditing standards require when a company outsources some of their IT requirements to an independent computer service center?

Accepted Answer

Auditing standards require the auditor t

Question 9

Discuss the advantages and benefits of using generalized audit software.

Accepted Answer

Advantages and benefits of using general

Question 10

Which of the following best explains the relationship between general controls and application controls?

Accepted Answer

A) Application controls are effective even if general controls are extremely weak. 
B) Application controls are likely to be effective only when general controls are effective. 
C) General controls have no impact on application controls. 
D) None of the above. 
A) Application controls are effective even if general controls are extremely weak. 
B) Application controls are likely to be effective only when general controls are effective. 
C) General controls have no impact on application controls. 
D) None of the above.

Question 11

If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll IT application?

Accepted Answer

A) Gross wages earned 
B) Employee numbers 
C) Total hours worked 
D) Total debit amounts and total credit amounts 
A) Gross wages earned 
B) Employee numbers 
C) Total hours worked 
D) Total debit amounts and total credit amounts

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 computer-assisted auditing techniques inserts an audit module in the client's application system to identify specific types of transactions?

Accepted Answer

A) Parallel simulation testing 
B) Test data approach 
C) Embedded audit module 
D) Generalized audit software testing 
A) Parallel simulation testing 
B) Test data approach 
C) Embedded audit module 
D) Generalized audit software testing

Question 14

Misstatements in the financial statement may not be detected with the increased use of IT due to: I.the loss of a visible audit trail.
II)reduced human involvement.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I or II 
A) I only 
B) II only 
C) both I and II 
D) neither I or II

Question 15

Auditors should evaluate which of the following before evaluating application controls because of the potential for pervasive effects?

Accepted Answer

A) Input controls 
B) Control environment 
C) Processing controls 
D) General controls 
A) Input controls 
B) Control environment 
C) Processing controls 
D) General controls

Question 16

Since IT systems can often initiate transactions automatically, proper authorization depends on software procedures and accurate master files used to make the authorization decision.

Accepted Answer

A) True 
 B)False

Question 17

The continued integration of IT in accounting systems can impact a company by:

Accepted Answer

A) increasing the costs of handling a large amount of data. 
B) increasing the number of manual controls needed. 
C) giving management higher-quality information more quickly than a manual system, thus helping management in their decision making process. 
D) decreasing the segregation of duties. 
A) increasing the costs of handling a large amount of data. 
B) increasing the number of manual controls needed. 
C) giving management higher-quality information more quickly than a manual system, thus helping management in their decision making process. 
D) decreasing the segregation of duties.

Question 18

When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that:

Accepted Answer

A) multiple users can access and update data files. 
B) the accounting information is only in one place. 
C) the database administrator may lack appropriate accounting knowledge. 
D) multiple users could all access the data simultaneously causing a system shutdown. 
A) multiple users can access and update data files. 
B) the accounting information is only in one place. 
C) the database administrator may lack appropriate accounting knowledge. 
D) multiple users could all access the data simultaneously causing a system shutdown.

Question 19

Rather than maintain an internal IT center, many companies outsource their basic IT functions such as payroll to an:

Accepted Answer

A) external general service provider. 
B) independent computer service center. 
C) internal control service provider. 
D) internal auditor. 
A) external general service provider. 
B) independent computer service center. 
C) internal control service provider. 
D) internal auditor.

Question 20

Programmers should only be allowed to work with test copies of programs and data.

Accepted Answer

A) True 
 B)False

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

LANs link equipment within a single or small cluster of buildings and are used within a company .

A database management system:

Controls which are designed to assure that the information processed by the computer is authorized, complete, and accurate are called:

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

Which of the following is a correct statement regarding general controls?

Which of the following is least likely to be used in obtaining an understanding of client general controls?

Which of the following best describes the test data approach?

What do auditing standards require when a company outsources some of their IT requirements to an independent computer service center?

Discuss the advantages and benefits of using generalized audit software.

Which of the following best explains the relationship between general controls and application controls?

If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll IT application?

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

Which of the following computer-assisted auditing techniques inserts an audit module in the client's application system to identify specific types of transactions?

Misstatements in the financial statement may not be detected with the increased use of IT due to: I.the loss of a visible audit trail. II)reduced human involvement.

Auditors should evaluate which of the following before evaluating application controls because of the potential for pervasive effects?

Since IT systems can often initiate transactions automatically, proper authorization depends on software procedures and accurate master files used to make the authorization decision.

The continued integration of IT in accounting systems can impact a company by:

When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that:

Rather than maintain an internal IT center, many companies outsource their basic IT functions such as payroll to an:

Programmers should only be allowed to work with test copies of programs and data.

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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