# Module H Acct 403

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In which of the following circumstances would an auditor expect to find that an entity had implemented automated controls to reduce risks of misstatement?

When errors are difficult to predict.

When misstatements are difficult to define.

When large, unusual, or nonrecurring transactions require judgment.

When transactions are high volume and recurring.
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Terms in this set (15)
In which of the following circumstances would an auditor expect to find that an entity had implemented automated controls to reduce risks of misstatement?

When errors are difficult to predict.

When misstatements are difficult to define.

When large, unusual, or nonrecurring transactions require judgment.

When transactions are high volume and recurring.
Which of the following would reduce the effectiveness of internal control in an accounting information system?

The computer librarian maintains custody of computer program instructions and detailed lists.

The control group is solely responsible for the distribution of all computer output.

Computer programmers write and debug programs that perform routines designed by the systems analyst
Which of the following is true with respect to fraud risk factors in an IT environment?

Employees in an IT environment are highly skilled.

Audit teams cannot evaluate the accounting information system during the year.

Higher dollar amounts are involved in an IT environment.

Employees have increased access to information systems and computer resources in an IT environment.
In an environment that is highly automated, an auditor determines that it is not possible to reduce detection risk solely by using substantive tests of transactions. Under these circumstances, the auditor most likely would

Perform tests of controls to support a lower level of assessed control risk.

Increase the sample size to reduce sampling risk and detection risk.

Adjust the materiality level and consider the effect on inherent risk.

Apply analytical procedures and consider the effect on control risk.
When using test data, why are audit teams required to prepare only one transaction to test each IT control?

The speed and efficiency of the computer results in reduced sample sizes.

The risk of misstatement is typically lower in an IT environment.

Audit teams generally perform more extensive substantive testing in an IT environment, resulting in less need to test processing controls.

In an IT environment, each transaction is handled in an identical manner.
Audit teams can obtain evidence of the proper functioning of password access control to a accounting information system by

Writing a computer program that simulates the logic of an effective password control system.

Selecting a random sample of the client's completed transactions to check the existence of proper authorization.

Attempting to sign on to the accounting information system with a false password.

Obtaining representations from the client's computer personnel that the password control prevents unauthorized entry.