Question 1

Audit teams cannot test the reliable operation of computer control procedures by

Accepted Answer

The only option that involves the manual reperformance of actual transaction processing with comparison of results to the actual system output is option D. This is a commonly used technique known as manual reperformance or reconciliation, and it is often used when computer-assisted audit techniques (CAATs) are not deemed reliable or when the audit team wants to obtain a high level of assurance about the effectiveness of the client's computer controls. Options A, B, and C all involve some degree of testing or comparison, but they do not involve the manual reperformance of transactions.

Question 2

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?

Accepted Answer

Check digit verification is used to detect errors in data entry, such as incorrect product codes, by verifying that the entered code matches a calculated check digit.

Question 3

An example of a program in which the audit team would be most interested in testing automated application controls is a(n)

Accepted Answer

The audit team would be most interested in testing automated application controls in a payroll processing program which involves a large amount of financial data and employee information. Automated application controls help in ensuring the accuracy of the financial information and the compliance with company policies and regulations. Therefore, it is important to test and verify the effectiveness of these controls to prevent any financial errors, discrepancies or fraud.

Question 4

When processing controls within the computerized processing system may not leave visible evidence that could be inspected by audit teams,the teams should:

Accepted Answer

Reviewing transactions submitted for processing and comparing them to related output helps auditors verify the accuracy and completeness of processing when there is no visible evidence of controls.

Question 5

Audit teams can obtain evidence of the proper functioning of password access control to a computerized processing system by

Accepted Answer

Attempting to sign on to the system with a false password tests the effectiveness of the password access control directly by checking if unauthorized access is prevented.

Question 6

Audit teams would most likely use computer-assisted audit techniques to

Accepted Answer

The answer of Audit teams would most likely use computer-assisted...

Question 7

In a computerized processing system,hardware controls are designed to

Accepted Answer

Hardware controls are designed to detect and control errors arising from the use of equipment such as input/output devices, memory, and the central processing unit.

Question 8

When auditing a computerized processing system,which of the following is not true of the test data approach?

Accepted Answer

The test data approach requires the test data to consist of all possible valid and invalid conditions, not just those of interest to the audit team. Options A, C and D are true statements about the test data approach.

Question 9

Controls used in the management of a computer center to minimize the possibility of using an incorrect file or program are

Accepted Answer

External labels are used to identify files and programs, helping to ensure that the correct ones are used, thus minimizing errors.

Question 10

Which of the following would reduce the effectiveness of internal control in a computerized processing system?

Accepted Answer

Allowing computer operators to have access to operator instructions and detailed program lists could potentially result in the compromise of internal controls, as it increases the risk of unauthorized access or modification of program instructions. In contrast, choices A, C, and D are all examples of internal controls that help to maintain the integrity and security of computerized processing systems.

Question 11

Which of the following is not a characteristic of a batch processing system?

Accepted Answer

Posting a transaction as it occurs to several files without intermediate printouts is a characteristic of a real-time processing system, not a batch processing system.

Question 12

Which of the following statements most likely represents a control consideration for an entity that performs its accounting using portable computing devices?

Accepted Answer

The use of portable computing devices increases the risk of unauthorized access to the system and data files being altered. Control measures such as password protection and encryption should be in place to mitigate this risk.

Question 13

Which of the following computerized processing systems generally can be audited without examining or directly testing the computer programs of the system?

Accepted Answer

A system that performs relatively uncomplicated processes and produces detailed output can be audited without examining or directly testing the computer programs of the system. The detailed output can be used to verify the accuracy of the processing done by the system.

Question 14

When using test data,why are audit teams required to prepare only one transaction to test each computer processing alternative?

Accepted Answer

In a computerized processing environment, each transaction is handled in an identical manner, which means that testing one transaction is sufficient to test the processing controls. This is because the computerized system is programmed to perform the same operation for each transaction of the same type. Therefore, auditing one transaction should provide sufficient evidence of the effectiveness of the processing controls for that type of transaction. This approach allows audit teams to focus on other areas where there may be a higher risk of misstatement.

Question 15

Audit teams use the test data method to gain certain assurances with respect to

Accepted Answer

The test data method involves selecting a set of input data and processing it through the program being audited to determine if the output is as expected. This allows the audit team to gain assurance regarding the control procedures contained within the program. It does not provide assurance regarding machine capacity, general controls, or input data specifically.

Question 16

The client's computerized exception reporting system helps audit teams conduct a more efficient audit because it

Accepted Answer

The client's computerized exception reporting system highlights abnormal conditions, which allows audit teams to focus on those areas that have a higher likelihood of potential errors or exceptions. This helps to conduct a more efficient audit by saving time and resources. While the system may also condense data, decrease the necessary level of tests of computer controls, or serve as an input control, neither of these options is as directly related to helping the audit team conduct a more efficient audit as the system's ability to highlight abnormal conditions.

Question 17

Which of the following automated application controls would offer reasonable assurance that inventory data were completely and accurately entered?

Accepted Answer

Batch totals would offer reasonable assurance that inventory data were completely and accurately entered. Batch totals sum all of the inventory items in a given batch and compare that total to the actual total entered by the user. If the totals match, the data has been entered accurately. If they do not match, an error occurred during data entry that needs to be resolved. Sequence checking compares transaction numbers to ensure that they are in chronological order. Limit tests check that the data entered falls within acceptable parameters. Check digits are used to detect errors in identification numbers based on a mathematical algorithm. While these controls are useful, they do not specifically address the completeness and accuracy of inventory data entry.

Question 18

Which of the following input controls would not be effective in identifying the erroneous input of numeric fields in a transaction?

Accepted Answer

Record counts only verify if all records have been processed, but they do not verify the accuracy of the input data. Batch totals, hash totals, and check digits all provide mechanisms for verifying the accuracy of numeric input.

Question 19

Computerized processing performed concurrently with a particular activity so that results are available to influence a decision being made is referred to as

Accepted Answer

Real-time processing refers to the immediate processing of data as it is received, allowing for timely decision making based on the results. It is different from batch processing (A) which involves processing data in bulk at a later time, integrated data processing (C) which involves combining data from different sources, and random access processing (D) which refers to the ability to access any data stored in a system without the need for sequential searching.

Question 20

Which of the following is true with respect to fraud risk factors in a computerized environment?

Accepted Answer

In a computerized environment, employees often have increased access to processing systems and computer resources, which can increase the risk of fraud. This is because there may be fewer physical controls in place to restrict access to data or systems, and potentially sophisticated computer skills may be required to perpetrate fraud. Options A and C are not necessarily true in all cases, and option B is not accurate as audit teams are able to evaluate computerized processing systems throughout the year.

Quiz 20: Auditing in a Computerized Environment