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1) Where disk files are used, the grandfather-father-son updating backup concept is relatively difficult to implement because the Location of information points on disks is an extremely time consuming task

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1) Where disk files are used, the grandfather-father-son updating backup concept is relatively difficult to implement because the

1. 1. Location of information points on disks is an extremely time consuming task.
   2. Magnetic fields and other environmental factors cause off-site storage to be impractical.
   3. Information must be dumped in the form of hard copy if it is to be reviewed before used in
   4. Process of updating old records is destructive.

 

2. A customer erroneously ordered Item No. 86321 rather than item No. 83621. When this order is processed, the vendor’s EDP department would identify the error with what type of control?
   1. Key verifying
   2. Batch total
   3. Self-checking digit
   4. Item inspection

 

3. The computer process whereby data processing is performed concurrently with a particular activity and the results are available soon enough to influence the course of action being taken or the decision being made is called:
   1. Random access sampling
   2. On-line, real-time system
   3. Integrated data processing
   4. Batch processing system

 

4. Internal control is ineffective when computer department personnel
   1. Participate in computer software acquisition decisions.
   2. Design documentation for computerized systems.
   3. Originate changes in master file.
   4. Provide physical security for program files.

 

5. Test data, integrated test data and parallel simulation each require an auditor to prepare data and computer programs. CPAs who lack either the technical expertise or time to prepare programs should request from the manufacturers or EDP consultants for
   1. The program Code
   2. Generalized audit software
   3. Flowchart checks
   4. Application controls

 

6. Which of the following best describes a fundamental control weakness often associated with electronic data processing system?
   1. EDP equipment is more subject to system error than manual processing is subject to human error.
   2. Monitoring is not an adequate substitute for the use of test data.
   3. EDP equipment processes and records similar transactions in a similar manner.
   4. Functions that would normally be separated in a manual system are combined in the EDP system like the function of programmers and operators.

 

7. Which of the following tasks could not be performed when using a generalized audit software package?
   1. Selecting inventory items for observations.
   2. Physical count of inventories.
   3. Comparison of inventory test counts with perpetual records.
   4. Summarizing inventory turnover statistics for obsolescence analysis.

 

8. All of the following are “auditing through the computer” techniques except
   1. Reviewing source code
   2. Automated tracking and mapping
   3. Test-decking
   4. Integrated test facility

 

9. The output of a parallel simulation should always be
   1. Printed on a report.
   2. Compared with actual results manually.
   3. Compared with actual results using a comparison program.
   4. Reconciled to actual processing output.

 

10. Generalized audit software is a computer-assisted audit technique. It is one of the widely used technique for auditing computer application systems. Generalized audit software is most often used to
    1. Verify computer processing.
    2. Process data fields under the control of the operation manager.
    3. Independently analyze data files.
    4. Both a and b.

 

 

 

11. From an audit viewpoint, which of the following represents a potential disadvantage associated with the widespread use of microcomputers?
    1. Their portability.
    2. Their ease of access by novice users.
    3. Their easily developed programs using spreadsheets which do not have to be documented.
    4. All of the above.

 

12. Which of the following functions would have the least effect on an audit if it was not properly segregated?
    1. The systems analyst and the programmer functions.
    2. The computer operator and programmer functions.
    3. The computer operator and the user functions.
    4. The applications programmer and the systems programmer.

 

13. To obtain evidence that user identification and password control procedures are functioning as designed, an auditor would most likely
    1. Attempt to sign on to the system using invalid user identifications and passwords.
    2. Write a computer program that simulates the logic of the client’s access control software.
    3. Extract a random sample of processed transactions and ensure that the transactions were appropriately authorized. Examine statements signed by employees stating that they have not divulged their user identifications and passwords to any other person.

 

14. In considering a client's internal control structure in a computer environment, the auditor will encounter general controls and application controls.  Which of the following is an application control?
    1. Organization charts.
    2. Hash total.
    3. Systems flowcharts.
    4. Control over program changes

 

15. Auditing by testing the input and output of a computer system--i.e., auditing "around" the computer--instead of the computer software itself will
    1. Not detect program errors that do not appear in the output sampled.
    2. Detect all program errors, regardless of the nature of the output.
    3. Provide the auditor with the same type of evidence.
    4. Not provide the auditor with confidence in the results of the auditing procedures.

 

16. Smith Corporation has numerous customers.  A customer file is kept on disk.  Each customer file contains the name, address, credit limit, and account balance.  The auditor wishes to test this file to determine whether credit limits are being exceeded. The best procedure for the auditor to follow would be to
    1. Develop test data that would cause some account balances to exceed the credit limit and determine if the system properly detects such situations.
    2. Develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.
    3. Request a printout of all account balances so they can be manually checked against the credit limits.
    4. Request a printout of a sample of account balances so they can be individually checked against the credit limits.

 

17. Which of the following methods of testing application controls utilizes software prepared by the auditors and applied to the client's data?
    1. Parallel simulation.
    2. Integrated test facility.
    3. Test data.
    4. Exception report tests.

 

18. The test–data method is used by auditors to test the         
    1. Accuracy of input data.
    2. Validity of the output.
    3. Procedures contained within the program.
    4. Normalcy of distribution of test data.

 

19. Which of the following is true of generalized audit software?           
    1. They can be used only in auditing on-line computer systems.
    2. They can be used on any computer without modification.
    3. They each have their own characteristics, which the auditor must carefully consider before using in a given audit situation.
    4. They enable the auditor to perform all manual compliance test procedures less expensively.

 

20.  Assume that an auditor estimated that 10,000 checks were issued during the accounting period.  If an application control that performs a limit check for each check request is to be subjected to the auditor's test–data approach, the sample should include:
    1. Approximately 1,000 test items.
    2. A number of test items determined by the auditor to be sufficient under the circumstances.
    3. A number of test items determined by the auditor's reference to the appropriate sampling tables.
    4. One transaction.

 

21.  PC DOS, MS DOS, and AppleDOS are examples of
    1. Application software.
    2. Generalized audit software.
    3. Database management systems.
    4. Operating software.

 

22.  Which of the following is not an example of a computer-assisted audit technique?
    1. Integrated test data.
    2. Audit modules.
    3. Disk operating systems.
    4. Audit hooks.

 

23. Which of the following statements most likely represents a disadvantage for an entity that maintains computer data files rather than manual files?
    1. It's usually more difficult to detect transposition errors.
    2. Transactions are usually authorized before they are executed and recorded.
    3. It's usually easier for unauthorized persons to access and alter the files.
    4. Random error is more common when similar transactions are processed in different ways.

 

24. Which of the following statements best describes a weakness often associated with computers?
    1. Computer equipment is more subject to systems error than manual processing is subject to human error.
    2. Computer equipment processes and records similar transactions in a similar manner.
    3. Control activities for detecting invalid and unusual transactions are less effective than manual control activities.
    4. Functions that would normally be separated in a manual system are combined in a computer system.

 

25. Accounting functions that are normally considered incompatible in a manual system are often combined by computer software. This necessitates an application control that prevents unapproved
    1. Access to the computer library.
    2. Revisions to existing software.
    3. Usage of software.
    4. Testing of modified software.              

 

26.  When software or files can be accessed from on?line servers, users should be required to enter
    1. A parity check.
    2. A personal identification code.
    3. A self?diagnosis test.
    4. An echo check.

 

27. An auditor's consideration of a company's computer control activities has disclosed the following four circumstances. Indicate which circumstance constitutes a significant deficiency in internal control.
    1. Computer operators do not have access to the complete software support documentation.
    2. Computer operators are closely supervised by programmers.
    3. Programmers are not authorized to operate computers.
    4. Only one generation of backup files is stored in an off?premises location.

 

28.   In a computer system, hardware controls are designed to
    1. Arrange data in a logical sequence for processing.
    2. Correct errors in software.
    3. Monitor and detect errors in source documents.
    4. Detect and control errors arising from use of equipment.

 

29. In the weekly computer run to prepare payroll checks, a check was printed for an employee who had been terminated the previous week.  Which of the following           controls, if properly utilized, would have been most effective in preventing the error or ensuring its prompt detection?                 
    1. A control total for hours worked, prepared from time cards collected by the timekeeping department.
    2. Requiring the treasurer's office to account for the      number of the pre-numbered checks issued to the CBIS department for the processing of the payroll
    3. Use of a check digit for employee numbers
    4. Use of a header label for the payroll input sheet

 

30.   An auditor is preparing test data for use in the audit of a computer based accounts receivable application.  Which of the following items would be appropriate to include as an item in the test data?
    1. A transaction record which contains an incorrect master file control total
    2. A master file record which contains an invalid customer identification number
    3. A master file record which contains an incorrect master file control total
    4. A transaction record which contains an invalid customer identification number.      

 

31. Unauthorized alteration of on-line records can be prevented by employing:
    1. Key verification
    2. Computer sequence checks
    3. Computer matching
    4. Data base access controls

 

32. In auditing through a computer, the test data method is used by auditors to test the                                   
    1. Accuracy of input data
    2. Validity of the output
    3. Procedures contained within the program
    4. Normalcy of distribution of test data.

 

33.   In the preliminary survey the auditor learns that a department has several microcomputers.  Which of the following is usually true and should be considered in planning the audit?
    1. Microcomputers, though small, are capable of processing  financial information, and physical security is a control concern
    2. Microcomputers are limited to applications such as worksheet generation and do not present a significant audit risk
    3. Microcomputers are generally under the control of the data processing department and use the same control features
    4. Microcomputers are too small to contain any built-in control features.  Therefore, other controls must be relied upon.
34. The primary reason for internal auditing's involvement in the development of new computer-based sysstems is to:
    1. Plan post-implementation reviews
    2. Promote adequate controls
    3. Train auditors in CBIS techniques
    4. Reduce overall audit effort.

 

35. Which of the following is an advantage of generalized computer audit packages?
    1. They are all written in one identical computer language
    2. They can be used for audits of clients that use differing CBIS equipment and file formats
    3. They have reduced the need for the auditor to study input controls for CBIS related procedures
    4. Their use can be substituted for a relatively large part of the required control testing

 

36. Processing simulated file data provides the auditor with information about the reliability of controls from evidence  that exists in simulated files.  One of the techniques involved in this approach makes use of                    
    1. Controlled reprocessing
    2. Program code checking
    3. Printout reviews
    4. Integrated test facility

 

37. Which of the following statements most likely represents a disadvantage for an entity that keeps microcomputer-prepared data files rather than manually prepared files?
    1. It is usually more difficult to detect transposition errors
    2. Transactions are usually authorized before they are executed and recorded
    3. It is usually easier for unauthorized persons to access and alter the files
    4. Random error associated with processing similar transactions in different ways is usually greater

 

38. The possibility of losing a large amount of information stored in computer files most likely would be reduced by the use of                                                          
    1. Back-up files 
    2. Check digits      
    3. Completeness tests
    4. Conversion verification

 

39. An integrated test facility (ITF) would be appropriate when the auditor needs to                                                
    1. Trace a complex logic path through an application system
    2. Verify processing accuracy concurrently with processing
    3. Monitor transactions in an application system continuously
    4. Verify load module integrity for production programs

 

40. Where computer processing is used in significant accounting applications, internal accounting control procedures may be defined by classifying control procedures into two types: general and                                                 
    1. Administrative
    2. Specific
    3. Application
    4. Authorization