Question 1

One potential disadvantage of IT systems is the reduction or elimination of source documents,which reduces the visibility of the audit trail.

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.

Question 3

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.

Question 4

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

Accepted Answer

Enhancements to internal control resulti...

Question 5

Auditors often use Generalized Audit Software during their testing of a client's internal controls.For the following uses of the software provide a description and an example.
Verify extensions and footings
Print confirmation requests
Compare data on separate files

Accepted Answer

Verify extensions and footings: verify accuracy of the clients computations; foot any subsidiary ledger
Print confirmation requests: print data for sample items selected for testing; randomly select accounts receivable customer balances for testing
Compare data on separate files: determine that information contained in two or more files agrees; changes in accounts payable or accounts receivables accounts using purchases/sales journals and cash disbursement/cash receipts registers.

Question 6

________ is not a risk specific to the IT environments.

Accepted Answer

A)   Reliance on the functioning capabilities of hardware and software
B)   Increased human involvement
C)   Loss of data due to insufficient backup
D)   Unauthorized access

Question 7

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. C

Question 8

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

Question 9

Identify the six categories of general controls and give one example of each.

Accepted Answer

General controls fall into the following...

Question 10

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

Accepted Answer

The responsibilities for IT management,s...

Question 11

When the client changes the computer software:

Accepted Answer

A)   no additional testing is needed by the auditor.
B)   and application controls are effective, the auditor can easily identify when software changes are made.
C)   and general controls are effective, the auditor can easily identify when software changes are made.
D)   application and general controls can no longer by relied upon by the auditor.

Question 12

Auditors:

Accepted Answer

A)   link controls and deficiencies in general controls to specific transaction-related audit objectives.
B)   can use a control risk matrix to help identify both manual and automated application controls and control deficiencies for each related audit objective.
C)   can rely on IT-based application controls for all cycles if general controls are ineffective.
D)   can use the IT staff to determine how much reliance they can place on general controls.

Question 13

An internal control deficiency occurs when computer personnel:

Accepted Answer

A)   participate in computer software acquisition decisions.
B)   design flowcharts and narratives for computerized systems.
C)   originate changes in customer master files.
D)   provide physical security over program files.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

IT controls are classified as either input controls or output controls.

Accepted Answer

A) True 
 B)False

Question 16

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.

Question 17

It is important for the auditor to understand both the general controls and the application controls a company has implemented.Which of the following statements is true about these controls?

Accepted Answer

A)   Auditors do not link IT controls to audit objectives.
B)   After identifying specific IT-based application controls that can be used to reduce control risk, auditors can reduce substantive testing.
C)   General controls affect audit objectives in only one cycle.
D)   The impact of general controls and application controls on audits does not vary depending on the level of complexity in the IT environment. B

Question 18

Parallel simulation is used primarily to test internal controls over the client's IT systems,whereas the test data approach is used primarily for substantive testing.

Accepted Answer

A) True 
 B)False

Question 19

The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client's data recorded in a machine language is:

Accepted Answer

A)   the test data approach.
B)   called auditing around the computer.
C)   the generalized audit software approach.
D)   the microcomputer-aided auditing approach.

Question 20

When auditing a client whose information is processed by an outside service provider,it is not acceptable for the auditor to rely on the audit report of another independent auditor who has previously tested the internal controls of the service provider,rather than testing the service provider's controls himself or herself.

Accepted Answer

A) True 
 B)False

Exam 12: Implications of Information Technology for the Audit Process

One potential disadvantage of IT systems is the reduction or elimination of source documents,which reduces the visibility of the audit trail.

Correct Answer
verified

A database management system:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
Enhancements to internal control resulti...
View Answer

Auditors often use Generalized Audit Software during their testing of a client's internal controls.For the following uses of the software provide a description and an example. Verify extensions and footings Print confirmation requests Compare data on separate files

________ is not a risk specific to the IT environments.

Correct Answer
verified

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

Correct Answer
verified
C

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

Correct Answer
verified

Identify the six categories of general controls and give one example of each.

Correct Answer
verified
General controls fall into the following...
View Answer

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

Correct Answer
verified
The responsibilities for IT management,s...
View Answer

When the client changes the computer software:

Correct Answer
verified

Auditors:

Correct Answer
verified

An internal control deficiency occurs when computer personnel:

Correct Answer
verified

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

Correct Answer
verified

IT controls are classified as either input controls or output controls.

Correct Answer
verified

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

Correct Answer
verified

It is important for the auditor to understand both the general controls and the application controls a company has implemented.Which of the following statements is true about these controls?

Correct Answer
verified
B

Parallel simulation is used primarily to test internal controls over the client's IT systems,whereas the test data approach is used primarily for substantive testing.

Correct Answer
verified

The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client's data recorded in a machine language is:

Correct Answer
verified

Correct Answer
verified

Exam 12: Implications of Information Technology for the Audit Process

One potential disadvantage of IT systems is the reduction or elimination of source documents,which reduces the visibility of the audit trail.

Correct AnswerverifiedShow Answer

A database management system:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedEnhancements to internal control resulti...View AnswerShow Answer

Auditors often use Generalized Audit Software during their testing of a client's internal controls.For the following uses of the software provide a description and an example. Verify extensions and footings Print confirmation requests Compare data on separate files

________ is not a risk specific to the IT environments.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Identify the six categories of general controls and give one example of each.

Correct AnswerverifiedGeneral controls fall into the following...View AnswerShow Answer

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

Correct AnswerverifiedThe responsibilities for IT management,s...View AnswerShow Answer

When the client changes the computer software:

Correct AnswerverifiedShow Answer

Auditors:

Correct AnswerverifiedShow Answer

An internal control deficiency occurs when computer personnel:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

IT controls are classified as either input controls or output controls.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

It is important for the auditor to understand both the general controls and the application controls a company has implemented.Which of the following statements is true about these controls?

Correct AnswerverifiedB

Parallel simulation is used primarily to test internal controls over the client's IT systems,whereas the test data approach is used primarily for substantive testing.

Correct AnswerverifiedShow Answer

The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client's data recorded in a machine language is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Enhancements to internal control resulti...
View Answer

Correct Answer
verified

Correct Answer
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C

Correct Answer
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Correct Answer
verified
General controls fall into the following...
View Answer

Correct Answer
verified
The responsibilities for IT management,s...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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