Module H Acct 403

Term
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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.
When transactions are high volume and recurring.
An example of a program in which the audit team would be most interested in testing automated application controls is a(n)

Payroll processing program.

Operating system program.

Data management system software.

Utility program.
Payroll processing program.
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.

Computer operators have access to operator instructions and detailed program 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
Computer operators have access to operator instructions and detailed program lists.
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.
Employees have increased access to information systems and computer resources in an IT environment.
Controls used in the management of a computer center to minimize the possibility of using an incorrect file or program are

Control totals.

Record counts.

Limit checks.

External labels.
External labels.
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.
Perform tests of controls to support a lower level of assessed control risk.
The client's computerized exception reporting system helps audit teams conduct a more efficient audit because it

Condenses data significantly.

Highlights abnormal conditions.

Decreases the necessary level of tests of computer controls.

Is an efficient computer input control.
Highlights abnormal conditions.
Audit teams use the test data method to gain certain assurances with respect to

Input data.

Machine capacity.

Control procedures contained within the program.

General controls.
Control procedures contained within the program.
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.
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.
Attempting to sign on to the accounting information system with a false password.
When processing controls within the accounting information system may not leave visible evidence that could be inspected by audit teams, the teams should Make corroborative inquiries. Observe the separation of duties of personnel. Review transactions submitted for processing and compare them to related output. Review the run manual.Review transactions submitted for processing and compare them to related output.Which of the following statements most likely represents a control consideration for an entity that performs its accounting using mobile computing devices? It is usually difficult to detect arithmetic errors. Unauthorized persons find it easy to access the computer and alter the data files. Transactions are coded for account classifications before they are processed on the computer. Random errors in report printing are rare in packaged software systems.Unauthorized persons find it easy to access the computer and alter the data files.A customer intended to order 100 units of product Z96014 but incorrectly ordered product Z96015, which is not an actual product. Which of the following controls most likely would detect this error? Check digit verification Record count Hash total Redundant data checkCheck digit verificationWhich of the following automated application controls would offer reasonable assurance that inventory data were completely and accurately entered? Sequence checking. Batch totals. Limit tests. Check digits.Batch totals.Which of the following persons is responsible for controlling access to systems documentation and access to program and data files? Programmers. Data conversion operators. Librarians. Computer operators.Librarians.