Chapter 7

Question 1

The three groups of application controls are batch controls, run-to-run controls, and audit trail controls

Answer 1

F

Question 2

A reasonableness check determines if a value in one field is reasonable when considered along with data in other fields of the record

Answer 2

T

Question 3

A trunctuation error is a form off transcription error

Answer 3

T

Question 4

A check digit is a method of detecting data coding errors

Answer 4

T

Question 5

Input controls are intended to detect errors in transactiond data after processing

Answer 5

F

Question 6

The black box approach to testing computer applications allows the auditor to explicitly review program logic.

Answer 6

F

Question 7

The black box approach to testing computer applications require a detailed knowledge of the the program logic being tested.

Answer 7

F

Question 8

A run-to-run control is an example of an output control

Answer 8

F

Question 9

A shredding computer printouts is an example of an output control

Answer 9

T

Question 10

In a computerized environment, all input controls are implemented after data is input

Answer 10

F

Question 11

Achieving batch control objectives requires grouping similar types of input transactions (such as sales orders) together in batches and then controlling the batches throughout data processing.

Answer 11

T

Question 12

The whte box tests of program controls are also known as auditing throgh the computer

Answer 12

T

Question 13

Incorrectly recording sales order number 123456 as 124356 is an example of a transcription error

Answer 13

F

Question 14

When using the test data method, the presence of multiple error messages indicates a flaw in the preparation of test transactions.

Answer 14

F

Question 15

The base case system evaluation is a variation of the test data method.

Answer 15

T

Question 16

Tracing is a method used to verify the logical operations executed by a computer application

Answer 16

T

Question 17

The results of a parallel simulation are compared to the results of a production run in order to judge the quality of the application processes and controls.

Answer 17

T

Question 18

Input controls are programmed procedures that perform tests on master file data to ensure they are free from errors.

Answer 18

F

Question 19

The integrated test facility (ITF) is an automated approach that permits auditors to test an application’s logic and controls during its normal operation.

Answer 19

T

Question 20

Use of integrated test facility poses no threat to organizational data files

Answer 20

F

Question 21

Spooling is a form of processing control

Answer 21

F

Question 22

A salami fraud affects a large number of victims, but the harm to each appears to be very small

Answer 22

T

Question 23

An input control that tests time card records to verify than no employee has worked more 50 hours in a pay period is an example of a range test.

Answer 23

F

Question 24

The black box approach to testing computer program controls is also known as auditing around the computer.

Answer 24

T

Question 25

Which statement is not correct? The audit trail in a computerized environment a. consists of records that are stored sequentially in an audit file b. traces transactions from their source to their final disposition c. is a function of the quality and integrity of the application programs d. may take the form of pointers, indexes, and embedded keys

Answer 25

A

Question 26

All of the following concepts are associated with the black box approach to auditing computer applications except a. the application need not be removed from service and tested directly b. auditors do not rely on a detailed knowledge of the application's internal logic c. the auditor reconciles previously produced output results with production input transactions d. this approach is used for complex transactions that receive input from many sources

Answer 26

D

Question 27

Which test is not an example of a white box test? a. determining the fair value of inventory b. ensuring that passwords are valid c. verifying that all pay rates are within a specified range d. reconciling control totals

Answer 27

A

Question 28

When analyzing the results of the test data method, the auditor would spend the least amount of time reviewing a. the test transactions b. error reports c. updated master files d. output reports

Answer 28

A

Question 29

All of the following are advantages of the test data technique except a. auditors need minimal computer expertise to use this method b. this method causes minimal disruption to the firm's operations c. the test data is easily compiled d. the auditor obtains explicit evidence concerning application function

Answer 29

C

Question 30

All of the following are disadvantages of the test data technique except a. the test data technique requires extensive computer expertise on the part of the auditor b. the auditor cannot be sure that the application being tested is a copy of the current application used by computer services personnel c. the auditor cannot be sure that the application being tested is the same application used throughout the entire year d. preparation of the test data is time-consuming ion

Answer 30

A

Question 31

Program testing a. involves individual modules only, not the full system b. requires creation of meaningful test data c. need not be repeated once the system is implemented d. is primarily concerned with usability

Answer 31

B

Question 32

The correct purchase order number,is123456. All of the following are transcription errors except a. 1234567 b. 12345 c. 124356 d. 123454

Answer 32

C

Question 33

Which of the following is correct? a. check digits should be used for all data codes b. check digits are always placed at the end of a data code c. check digits do not affect processing efficiency d. check digits are designed to detect transcription and transposition errors

Answer 33

D

Question 34

Which statement is not correct? The goal of batch controls is to ensure that during processing a. transactions are not omitted b. transactions are not added c. transactions are free from clerical errors d. an audit trail is created

Answer 34

C

Question 35

An example of a hash total is a. total payroll checks—$12,315 b. total number of employees—10 c. sum of the social security numbers—12,555,437,251 d. none of the above

Answer 35

D

Question 36

Which statement is not true? A batch control record a. contains a transaction code b. records the record count c. contains a hash total d. control figures in the record may be adjusted during processing e. All the above are true

Answer 36

E

Question 37

Which of the following is not an example of a processing control? a. hash total. b. record count. c. batch total. d. check digit

Answer 37

D

Question 38

Which of the following is an example of input control test? a. sequence check b. zero value check c. spooling check d. range check

Answer 38

D

Question 39

Which input control check would detect a payment made to a nonexistent vendor? a. missing data check b. numeric/alphabetic check c. range check d. validity check

Answer 39

D

Question 40

Which input control check would detect a posting to the wrong customer account? a. missing data check b. check digit c. reasonableness check d. validity check

Answer 40

B

Question 41

The employee entered "40" in the "hours worked per day" field. Which check would detect this unintentional error? a. numeric/alphabetic data check b. sign check c. limit check d. missing data check

Answer 41

C

Question 42

An inventory record indicates that 12 items of a specific product are on hand. A customer purchased two of the items, but when recording the order, the data entry clerk mistakenly entered 20 items sold. Which check could detect this error? a. numeric/alphabetic data checks b. limit check c. range check d. reasonableness check

Answer 42

B

Question 43

Which check is not an input control? a. reasonableness check b. validity check. c. spooling check d. missing data check

Answer 43

C

Question 44

A computer operator was in a hurry and accidentally used the wrong master file to process a transaction file. As a result, the accounts receivable master file was erased. Which control would prevent this from happening? a. header label check b. expiration date check C. Version check D. Validity check

Answer 44

A

Question 45

Run-to-run control totals can be used for all of the following except a. to ensure that all data input is validated b. to ensure that only transactions of a similar type are being processed c. to ensure the records are in sequence and are not missing d. to ensure that no transaction is omitted

Answer 45

A

Question 46

Methods used to maintain an audit trail in a computerized environment include all of the following except a. transaction logs b. Transaction Listings. c. data encryption d. log of automatic transactions

Answer 46

C

Question 47

Risk exposures associated with creating an output file as an intermediate step in the printing process (spooling) include all of the following actions by a computer criminal except a. gaining access to the output file and changing critical data values b. using a remote printer and incurring operating inefficiencies c. making a copy of the output file and using the copy to produce illegal output reports d. printing an extra hardcopy of the output file

Answer 47

B

Question 48

Which statement is not correct? a. only successful transactions are recorded on a transaction log b. unsuccessful transactions are recorded in an error file c. a transaction log is a temporary file d. a hardcopy transaction listing is provided to users

Answer 48

C

Question 49

Input controls include all of the following except a. check digits b. Limit check. c. spooling check d. missing data check

Answer 49

C

Question 50

Which of the following is an example of an input error correction technique? a. immediate correction b. rejection of batch c. creation of error file d. all are examples of input error correction techniques

Answer 50

D

Question 51

All of the following statements are true about the integrated test facility (ITF) except A. Production reports are affected by ITF transactions b. ITF databases contain "dummy" records integrated with legitimate records c. ITF permits ongoing application auditing d. ITF does not disrupt operations or require the intervention of computer services personn

Answer 51

C

Question 52

Which of the following is an input control? a. Reasonableness check b. Run-to-run check c. Spooling check d. Batch check e. None are input controls

Answer 52

A

Question 53

Which of the following is not an input control? a. Range check b. Limit check c. Spooling check d. Validity check e. They are all input contro

Answer 53

C

Question 54

When auditors do not rely on a detailed knowledge of the application's internal logic, they are performing a. black box tests of program controls b. white box tests of program controls c. substantive testing d. intuitive testing

Answer 54

A