Question 1

Output controls focus on preventing errors during processing.

Accepted Answer

Output controls are measures implemented to ensure that system outputs are complete, accurate, and distributed securely to authorized users, rather than preventing errors during processing, which is the focus of processing controls.

Question 2

A large portion of errors in IT systems result from data entry errors.

Accepted Answer

Data entry errors such as mistyping, misinterpreting, or omitting information can cause a variety of issues in IT systems, leading to incorrect outputs, system crashes, and other problems. Therefore, data entry accuracy is crucial in ensuring the reliability and effectiveness of IT systems.

Question 3

What are the two software testing strategies that companies typically use?
 Which strategy is more expensive?

Accepted Answer

The answer of What are the two software testing strategies...

Question 4

Processing controls include the following tests:
Validation
Sequence
Data Reasonableness
Completeness
Describe what each control is designed to do:

Accepted Answer

The answer of Processing controls include the following tests:
Validation
Sequence
Data Reasonableness
Completeness
Describe...

Question 5

Parallel testing is used when old and new systems are operated simultaneously in all locations.

Accepted Answer

Parallel testing involves running old and new systems simultaneously to ensure they produce the same results, allowing for a smooth transition from the old to the new system.

Question 6

Parallel testing is more expensive than pilot testing.

Accepted Answer

Parallel testing involves running both the new and old systems simultaneously, which requires more resources and time, making it more expensive than pilot testing, where only a portion of the system is tested.

Question 7

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

Accepted Answer

IT controls are classified into various categories beyond just input and output controls, including preventive, detective, and corrective controls, as well as administrative, physical, and technical controls.

Question 8

Identify the three categories of application controls, and give one example of each.

Accepted Answer

The answer of Identify the three categories of application controls,...

Question 9

In IT systems, if general controls are effective, it increases the auditor's ability to rely on application controls to reduce control risk.

Accepted Answer

General controls provide a framework for application controls to operate within. When general controls are effective, they ensure the reliability and security of the IT systems, which allows an auditor to rely on application controls more confidently to reduce control risk.

Question 10

Define control for general controls and application controls.Also list the categories of controls included under general controls and application controls.

Accepted Answer

The answer of Define control for general controls and application...

Question 11

In comparing (1)the adequacy of the hardware controls in the system with (2)the organization's methods of handling the errors that the computer identifies, the independent auditor is:
A)unconcerned with both (1)and (2).
B)equally concerned with (1)and (2).
C)less concerned with (1)than with (2).
D)more concerned with (1)than with (2).

Accepted Answer

The answer of In comparing (1)the adequacy of the hardware...

Question 12

Programmers should only be allowed to work with test copies of programs and data.

Accepted Answer

Working with test copies instead of live data or production environments helps prevent accidental data loss, corruption, or system downtime, ensuring the integrity and security of the actual data and systems.

Question 13

One category of general controls is physical and online access controls.Describe the control and give at two examples of implementation of the control.

Accepted Answer

The answer of One category of general controls is physical...

Question 14

The most important output control is:
A)distribution control, which assures that only authorized personnel receive the reports generated by the system.
B)review of data for reasonableness by someone who knows what the output should look like.
C)control totals, which are used to verify that the computer's results are correct.
D)logic tests, which verify that no mistakes were made in processing.

Accepted Answer

The answer of The most important output control is:
A)distribution control,...

Question 15

The effectiveness of automated controls depends solely on the competence of the personnel performing the controls.

Accepted Answer

The effectiveness of automated controls does not solely depend on the personnel performing the controls. Automated controls are designed to operate without human intervention and should be able to identify and prevent or detect unauthorized activities. However, the effectiveness of automated controls can be enhanced by competent personnel who design, implement, and monitor the controls.

Question 16

Knowledge of both general and application controls is crucial for auditors in understanding how accounting information is recorded and reported.

Accepted Answer

Knowledge of both general and application controls helps auditors assess the reliability and validity of the accounting information system, and identify any control weaknesses or potential fraud risks. Therefore, it is crucial for auditors to have a good understanding of both types of controls.

Question 17

Processing controls are a category of application controls.

Accepted Answer

Processing controls focus on ensuring the accuracy, completeness, and validity of data during specific processing functions such as creating, modifying, or deleting data. These controls are typically implemented within an application or system and are a type of application controls.

Question 18

Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls.

Accepted Answer

Application controls are designed to ensure the completeness, accuracy, validity, and authorization of transactions in a specific application or system, such as sales or cash receipts.

Question 19

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

Accepted Answer

The answer of Identify the six categories of general controls...

Question 20

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

Accepted Answer

The answer of Discuss the four areas of responsibility under...

Quiz 12: The Impact of Information Technology on the Audit Process