Question 1

Internal control systems are recommended but not required of firms subject to the Sarbanes-Oxley Act.

Accepted Answer

A) True 
 B)False

Question 2

An inventory record indicates that 12 items of a specific product are on hand. A customer purchased two of the items, but when recording the order, the data entry clerk mistakenly entered 20 items sold. Which check could detect this error?

Accepted Answer

A)  numeric/alphabetic data checks 
B)  limit check 
C)  range check 
D)  reasonableness check 
A)  numeric/alphabetic data checks 
B)  limit check 
C)  range check 
D)  reasonableness check

Question 3

Which of the following situations is not a segregation of duties violation?

Accepted Answer

A) 
The purchasing department initiates purchases when the purchasing supervisor determines inventory levels are too low. 
B)  The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, keeps the official inventory records. 
C)  The sales manager has the responsibility to approve credit and the authority to write off accounts. 
D)  The accounting clerk who shares the record keeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account. 
E)  All of these are segregation of duty violations. 
A) 
The purchasing department initiates purchases when the purchasing supervisor determines inventory levels are too low. 
B)  The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, keeps the official inventory records. 
C)  The sales manager has the responsibility to approve credit and the authority to write off accounts. 
D)  The accounting clerk who shares the record keeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account. 
E)  All of these are segregation of duty violations.

Question 4

What are the five internal control components described in the COSO framework?

Accepted Answer

the control environment, risk

Question 5

A key modifying assumption in internal control is that the internal control system is the responsibility of management.

Accepted Answer

A) True 
 B)False

Question 6

Forces which may permit fraud to occur do not include

Accepted Answer

A)  a gambling addiction 
B)  lack of segregation of duties 
C)  centralized decision making environment 
D)  questionable integrity of employees 
A)  a gambling addiction 
B)  lack of segregation of duties 
C)  centralized decision making environment 
D)  questionable integrity of employees

Question 7

A check digit is a method of detecting data coding errors.

Accepted Answer

A) True 
 B)False

Question 8

While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.

Accepted Answer

A) True 
 B)False

Question 9

An example of a hash total is

Accepted Answer

A)  total payroll checks-$12,315 
B)  total number of employees-10 
C)  sum of the social security numbers-12,555,437,251 
D)  all of the above 
A)  total payroll checks-$12,315 
B)  total number of employees-10 
C)  sum of the social security numbers-12,555,437,251 
D)  all of the above

Question 10

Which of the following is not an example of independent verification?

Accepted Answer

A)  comparing fixed assets on hand to the accounting records 
B)  performing a bank reconciliation 
C)  comparing the accounts payable subsidiary ledger to the control account 
D)  permitting only authorized users to access the accounting system 
A)  comparing fixed assets on hand to the accounting records 
B)  performing a bank reconciliation 
C)  comparing the accounts payable subsidiary ledger to the control account 
D)  permitting only authorized users to access the accounting system

Question 11

Ethical issues and legal issues are essentially the same.

Accepted Answer

A) True 
 B)False

Question 12

What control issue is related to reentering corrected error records into a batch processing system? What are the two methods for doing this?

Accepted Answer

Errors detected during processing requir

Question 13

The concept of reasonable assurance suggests that

Accepted Answer

A)  the cost of an internal control should be less than the benefit it provides 
B)  a well-designed system of internal controls will detect all fraudulent activity 
C)  the objectives achieved by an internal control system vary depending on the data processing method 
D)  the effectiveness of internal controls is a function of the industry environment 
A)  the cost of an internal control should be less than the benefit it provides 
B)  a well-designed system of internal controls will detect all fraudulent activity 
C)  the objectives achieved by an internal control system vary depending on the data processing method 
D)  the effectiveness of internal controls is a function of the industry environment

Question 14

The ethical principle of informed consent suggests that the decision should be implemented so as to minimize all of the risks and to avoid any unnecessary risks.

Accepted Answer

A) True 
 B)False

Question 15

What are the three broad categories of application controls?

Accepted Answer

input, pro

Question 16

All of the following are conditions for fraud except

Accepted Answer

A)  false representation 
B)  injury or loss 
C)  intent 
D)  material reliance 
A)  false representation 
B)  injury or loss 
C)  intent 
D)  material reliance

Question 17

Which of the following is correct?

Accepted Answer

A)  check digits should be used for all data codes 
B)  check digits are always placed at the end of a data code 
C)  check digits do not affect processing efficiency 
D)  check digits are designed to detect transcription and transposition errors 
A)  check digits should be used for all data codes 
B)  check digits are always placed at the end of a data code 
C)  check digits do not affect processing efficiency 
D)  check digits are designed to detect transcription and transposition errors

Question 18

Shredding computer printouts is an example of an output control.

Accepted Answer

A) True 
 B)False

Question 19

The ethical principle of justice asserts that the benefits of the decision should be distributed fairly to those who share the risks.

Accepted Answer

A) True 
 B)False

Question 20

Giving, receiving, offering or soliciting something of value because of an official act that has been taken is

Accepted Answer

A)  bribery 
B)  a conflict of interest 
C)  an illegal gratuity 
D)  economic extortion 
A)  bribery 
B)  a conflict of interest 
C)  an illegal gratuity 
D)  economic extortion

Internal control systems are recommended but not required of firms subject to the Sarbanes-Oxley Act.

An inventory record indicates that 12 items of a specific product are on hand. A customer purchased two of the items, but when recording the order, the data entry clerk mistakenly entered 20 items sold. Which check could detect this error?

Which of the following situations is not a segregation of duties violation?

What are the five internal control components described in the COSO framework?

A key modifying assumption in internal control is that the internal control system is the responsibility of management.

Forces which may permit fraud to occur do not include

A check digit is a method of detecting data coding errors.

While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.

An example of a hash total is

Which of the following is not an example of independent verification?

Ethical issues and legal issues are essentially the same.

What control issue is related to reentering corrected error records into a batch processing system? What are the two methods for doing this?

The concept of reasonable assurance suggests that

The ethical principle of informed consent suggests that the decision should be implemented so as to minimize all of the risks and to avoid any unnecessary risks.

What are the three broad categories of application controls?

All of the following are conditions for fraud except

Which of the following is correct?

Shredding computer printouts is an example of an output control.

The ethical principle of justice asserts that the benefits of the decision should be distributed fairly to those who share the risks.

Giving, receiving, offering or soliciting something of value because of an official act that has been taken is

The Information System: an Accountants Perspective

Introduction to Transaction Processing

The Revenue Cycle

The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures

The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

Financial Reporting, and Management Reporting Systems

Database Management Systems

The Rea Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct, Deliver, and Maintain Systems Projects

IT Controls Part I: Sarbanes-Oxley and It Governance

IT Controls Part II: Security and Access

IT Controls Part III: Systems Development, Program Changes, and Application Controls

Filters

Exam 3: Ethics, Fraud, and Internal Control

Internal control systems are recommended but not required of firms subject to the Sarbanes-Oxley Act.

An inventory record indicates that 12 items of a specific product are on hand. A customer purchased two of the items, but when recording the order, the data entry clerk mistakenly entered 20 items sold. Which check could detect this error?

Which of the following situations is not a segregation of duties violation?

What are the five internal control components described in the COSO framework?

A key modifying assumption in internal control is that the internal control system is the responsibility of management.

Forces which may permit fraud to occur do not include

A check digit is a method of detecting data coding errors.

While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.

An example of a hash total is

Which of the following is not an example of independent verification?

Ethical issues and legal issues are essentially the same.

What control issue is related to reentering corrected error records into a batch processing system? What are the two methods for doing this?

The concept of reasonable assurance suggests that

The ethical principle of informed consent suggests that the decision should be implemented so as to minimize all of the risks and to avoid any unnecessary risks.

What are the three broad categories of application controls?

All of the following are conditions for fraud except

Which of the following is correct?

Shredding computer printouts is an example of an output control.

The ethical principle of justice asserts that the benefits of the decision should be distributed fairly to those who share the risks.

Giving, receiving, offering or soliciting something of value because of an official act that has been taken is

The Information System: an Accountants Perspective

Introduction to Transaction Processing

The Revenue Cycle

The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures

The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

Financial Reporting, and Management Reporting Systems

Database Management Systems

The Rea Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct, Deliver, and Maintain Systems Projects

IT Controls Part I: Sarbanes-Oxley and It Governance

IT Controls Part II: Security and Access

IT Controls Part III: Systems Development, Program Changes, and Application Controls

Filters