Homework answers / question archive / 1) Creating simulated transactions that are processed through a system to generate results that are compared with predetermined results, is an auditing procedure referred to as Desk checking Use of test data Completing outstanding jobs Parallel simulation   To obtain evidential matter about control risk, an auditor ordinarily selects tests from a variety of techniques, including Analysis Confirmations Reprocessing Comparison   A major exposure associated with the rapidly expanding use of microcomputers is the absence of:                                Adequate size of main memory and disk storage Compatible operating systems Formalized procedures for purchase justification Physical, data file, and program security   To ensure that goods received are the same as those shown on  the purchase invoice, a computerized system should: Match selected fields of the purchase invoice to goods received Maintain control totals of inventory value Calculate batch totals for each input Use check digits in account numbers   Errors in data processed in a batch computer system may not be detected immediately because Transaction trails in a batch system are available only for a limited period of time There are time delays in processing transactions in a batch system Errors in some transactions cause rejection of other transactions in the batch Random errors are more likely in a batch system than in                 an on-line system   Which of the following is a computer test made to ascertain whether a given characteristic belongs to the group?         Parity check Validity check Echo check Limit check

1) Creating simulated transactions that are processed through a system to generate results that are compared with predetermined results, is an auditing procedure referred to as Desk checking Use of test data Completing outstanding jobs Parallel simulation   To obtain evidential matter about control risk, an auditor ordinarily selects tests from a variety of techniques, including Analysis Confirmations Reprocessing Comparison   A major exposure associated with the rapidly expanding use of microcomputers is the absence of:                                Adequate size of main memory and disk storage Compatible operating systems Formalized procedures for purchase justification Physical, data file, and program security   To ensure that goods received are the same as those shown on  the purchase invoice, a computerized system should: Match selected fields of the purchase invoice to goods received Maintain control totals of inventory value Calculate batch totals for each input Use check digits in account numbers   Errors in data processed in a batch computer system may not be detected immediately because Transaction trails in a batch system are available only for a limited period of time There are time delays in processing transactions in a batch system Errors in some transactions cause rejection of other transactions in the batch Random errors are more likely in a batch system than in                 an on-line system   Which of the following is a computer test made to ascertain whether a given characteristic belongs to the group?         Parity check Validity check Echo check Limit check

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1) Creating simulated transactions that are processed through a system to generate results that are compared with predetermined results, is an auditing procedure referred to as

1. 1. Desk checking
   2. Use of test data
   3. Completing outstanding jobs
   4. Parallel simulation

 

2. To obtain evidential matter about control risk, an auditor ordinarily selects tests from a variety of techniques, including
   1. Analysis
   2. Confirmations
   3. Reprocessing
   4. Comparison

 

3. A major exposure associated with the rapidly expanding use of microcomputers is the absence of:                               
   1. Adequate size of main memory and disk storage
   2. Compatible operating systems
   3. Formalized procedures for purchase justification
   4. Physical, data file, and program security

 

4. To ensure that goods received are the same as those shown on  the purchase invoice, a computerized system should:
   1. Match selected fields of the purchase invoice to goods received
   2. Maintain control totals of inventory value
   3. Calculate batch totals for each input
   4. Use check digits in account numbers

 

5. Errors in data processed in a batch computer system may not be detected immediately because
   1. Transaction trails in a batch system are available only for a limited period of time
   2. There are time delays in processing transactions in a batch system
   3. Errors in some transactions cause rejection of other transactions in the batch
   4. Random errors are more likely in a batch system than in                 an on-line system

 

6. Which of the following is a computer test made to ascertain whether a given characteristic belongs to the group?        
   1. Parity check
   2. Validity check
   3. Echo check
   4. Limit check.                                            
7. The nature of the risks and the internal characteristics in CIS environment that the auditors are mostly concerned include the following except:
   1. Lack of segregation of functions.
   2. Lack of transaction trails.
   3. Dependence of other control over computer processing.
   4. Cost-benefit ratio.

 

8. Which of the following is least likely a risk characteristic associated with CIS environment?
   1. Errors embedded in an application’s program logic maybe difficult to manually detect on a timely basis.
   2. Many control procedures that would ordinarily be performed by separate individuals in manual system maybe concentrated in CIS.
   3.  The potential unauthorized access to data or to alter them without visible evidence maybe greater.
   4. Initiation of changes in the master file is exclusively handled by respective users.

 

9. Which of the following significance and complexity of the CIS activities should an auditor least understand?
   1. The organizational structure of the client’s CIS activities.
   2. Lack of transaction trails.
   3. The significance and complexity of computer processing in each significant accounting application.
   4. The use of software packages instead of customized software.

 

10. Which statement is correct regarding personal computer systems?
    1. Personal computers or PCs are economical yet powerful self-contained general purpose computers consisting typically of a central processing unit (CPU), memory, monitor, disk drives, printer cables and modems.
    2.  Programs and data are stored only on non-removable storage media.
    3. Personal computers cannot be used to process accounting transactions and produce reports that are essential to the preparation of financial statements.
    4.  Generally, CIS environments in which personal computers are used are the same with other CIS environments.

 

11. A personal computer can be used in various configurations, including
    1. A stand-alone workstation operated by a single user or a number of users at different times.
    2. A workstation which is part of a local area network of personal computers.
    3. A workstation connected to a server.
    4. All of the above.

 

12. Which statement is incorrect regarding personal computer configurations?
    1. The stand-alone workstation can be operated by a single user or a number of users at different times accessing the same or different programs.
    2. A stand-alone workstation may be referred to as a distributed system.
    3.  A local area network is an arrangement where two or more personal computers are linked together through the use of special software and communication lines.
    4.  Personal computers can be linked to servers and used as part of such systems, for example, as an intelligent on-line workstation or as part of a distributed accounting system.
13. The effect of personal computers on the accounting system and the associated risks will least likely depend on
    1. The extent to which the personal computer is being used to process accounting applications.
    2.  The type and significance of financial transactions being processed.
    3.  The nature of files and programs utilized in the applications.
    4.  The cost of personal computers.

 

14. The auditor may often assume that control risk is high in personal computer systems since, it may not be practicable or cost-effective for management to implement sufficient controls to reduce the risks of undetected errors to a minimum level. This least likely entail
    1. More physical examination and confirmation of assets.
    2. More analytical procedures than tests of details.
    3. Larger sample sizes.
    4. Greater use of computer-assisted audit techniques, where appropriate.

 

15. Computer systems that enable users to access data and programs directly through workstations are referred to as
    1. On-line computer systems
    2. Personal computer systems
    3. Database management systems (DBMS)
    4. Database systems

 

16. On-line systems allow users to initiate various functions directly. Such functions include:
    1. 1. Entering transactions
       2. Requesting reports
       3. Making inquiries
       4. Updating master files

1. I, II, III and IV
2. I and II
3. I, II and III
4. I and IV

 

17. Audit automation least likely include
    1. Expert systems.
    2. Tools to evaluate a client’s risk management procedures.
    3. Manual working papers.
    4. Corporate and financial modeling programs for use as predictive audit tests.

 

18. An internal auditor noted the following points when conducting a preliminary survey in connection with the audit of an EDP department. Which of the following would be considered a safeguard in the control system on which the auditor might rely?
    1. Programmers and computer operators correct daily processing problems as they arise.
    2. The control group works with user organizations to correct rejected input.
    3. New systems are documented as soon as possible after they begin processing live data.
    4. The average tenure of employees working in the EDP department is ten months.

 

19. An on-line access control that checks whether the user’s code number is authorized to initiate a specific type of transaction or inquiry is referred to as
    1. Password
    2. Compatibility test
    3. Limit check
    4. Reasonableness test

 

20. A control procedure that could be used in an on-line system to provide an immediate check on whether an account number has been entered on a terminal accurately is a
    1. Compatibility test
    2. Record count
    3. Hash total
    4. Self-checking digit

 

21. A control designed to catch errors at the point of data entry is
    1. Batch total
    2. Self-checking digit
    3. Record count
    4. Checkpoints

 

22. Program documentation is a control designed primarily to ensure that
    1. Programmers have access to the tape library or information on disk files.
    2. Programs do not make mathematical errors.
    3. Programs are kept up to date and perform as intended.
    4. Data have been entered and processed.

 

23. An auditor would most likely be concerned with which of the following controls in a distributed data processing system?
    1. Hardware controls
    2. Access controls
    3. Systems documentation controls
    4. Disaster recovery controls

 

24. If a control total were computed on each of the following data items, which would best be identified as a hash total for a payroll EDP application?
    1. Total debits and total credits
    2. Department numbers
    3. Net pay
    4. Hours worked

 

25. Which of the following is a computer test made to ascertain whether a given characteristic belongs to the group?
    1. Parity check
    2. Echo check
    3. Validity check
    4. Limit check

 

26. A control feature in an electronic data processing system requires the central processing unit (CPU) to send signals to the printer to activate the print mechanism for each character. The print mechanism, just prior to printing, sends a signal back to the CPU verifying that the proper print position has been activated. This type of hardware control is referred to as
    1. Echo check
    2. Signal control
    3. Validity control
    4. Check digit control

 

27. Which of the following is an example of a check digit?
    1. An agreement of the total number of employees to the total number of checks printed by the computer.
    2. An algebraically determined number produced by the other digits of the employee number
    3. A logic test that ensures all employee numbers are nine digits.
    4. A limit check that an employee’s hours do not exceed 50 hours per work week.

 

28. In a computerized system, procedure or problem-oriented language is converted to machine language through a(an)
    1. Interpreter
    2. Verifier
    3. Compiler
    4. Converter

 

29. Which of the following is likely to be of least importance to an auditor in reviewing the internal control in a company with a CBIS?                             
    1. The segregation of duties within the data processing center.
    2. The control over source documents
    3. The documentation maintained for accounting applications.
    4. The cost/benefit ratio of data processing operations

 

30. For the accounting system of Acme Company, the amounts of cash disbursements entered into an CBIS terminal are transmitted to the computer that immediately transmits the amounts back to the terminal for display on the terminal screen.  This display enables the operator to                              
    1. Establish the validity of the account number
    2. Verify the amount was entered accurately
    3. Verify the authorization of the disbursement
    4. Prevent the overpayment of the account

 

31. Which of the following audit techniques most likely would provide an auditor with the most assurance about the effectiveness of the operation of an internal control procedure?
    1. Inquiry of client personnel
    2. Recomputation of account balance amounts
    3. Observation of client personnel
    4. Confirmation with outside parties

 

32. Adequate technical training and proficiency as an auditor encompasses an ability to understand a CBIS sufficiently to identify and evaluate                       
    1. The processing and imparting of information
    2. Essential accounting control features
    3. All accounting control features
    4. The degree to which programming conforms with application of generally accepted accounting principles.

 

 

33. Which of the following is not a major reason why an accounting audit trail should be maintained for a computer system?     
    1. Query answering
    2. Deterrent to fraud
    3. Monitoring purposes
    4. Analytical review

 

34. Adequate control over access to data processing is required  to  
    1. Prevent improper use or manipulation of data files and programs
    2. Ensure that only console operators have access to program documentation
    3. Minimize the need for backup data files
    4. Ensure that hardware controls are operating effectively and as designed by the computer manufacturer

 

35. When testing a computerized accounting system, which of the following is not true of the test data approach?            
    1. The test data need consist of only those valid and invalid conditions in which the auditor is interested
    2. Only one transaction of each type need be tested
    3. Test data are processed by the client's computer programs under the auditor's control
    4. The test data must consist of all possible valid and invalid conditions

 

36. In studying a client's internal controls, an auditor must be able to distinguish between prevention controls and detection controls.  Of the following data processing controls, which is the best detection control?                                     
    1. Use of data encryption techniques
    2. Review of machine utilization logs
    3. Policy requiring password security
    4. Backup and recovery procedure