Deck 10: Computer Controls for Organizations and Accounting Information Systems

Question 1

All controls available for the computerized accounting information system of a company should be implemented regardless of cost due to the high rate of computer crime.

Answer 1

False

Question 2

The audit trail is easier to follow in an online computerized system as compared to a batch system.

Answer 2

False

Question 3

Consensus-based protocols contain an odd number of processors.

Answer 3

True

Question 4

A hash total is obtained by counting all documents or records to be processed.

Question 5

Information processing personnel usually only use selective edit checks in data processing applications due to the cost of computer time necessary for editing.

Question 6

Contingency planning includes the development of a formal disaster recovery plan.

Question 7

Testing processing programs with test data is performed only when a system is first installed due to the high costs of such test runs.

Question 8

Most computer vandalism is performed by "professional" computer criminals who have no personal contact with the computer centres they disrupt.

Question 9

The primary function of controls for a computerized accounting information system is to detect computer fraud.

Question 10

One of the "fallback" procedures of a computing centre is the "grandfather?parent-child" file arrangement.

Question 11

One of the techniques for controlling batch processing is the use of hash totals.

Question 12

Output controls for the computerized accounting information system focus primarily on the security and distribution of print media prepared by the computer centre.

Question 13

Input controls attempt to assure the validity, accuracy and completeness of the data entered into an AIS.

Question 14

No record of transactions is made in an online computerized system.

Question 15

Biometric identifications are irrelevant to computer network systems.

Question 16

In most companies, contingency planning is unnecessary.

Question 17

Edit checks are very rarely used because they are not cost-effective controls.

Question 18

The control of input and output of accounting transactions to and from the information processing subsystem should be performed by an independent control group.

Question 19

It is more difficult to safeguard logical computer access than it is to safeguard physical computer access.

Question 20

According to the text, data transcription would only be necessary for a computerized accounting information system.

Question 21

The principal function of an accounting system's computerized controls is:

A)Detecting computer frauds
B)Preventing computer frauds
C)Encouraging programmer honesty
D)none of the above

Question 22

Edit checks performed "in tandem" would be defined as:

A)Tests of alphanumeric field content
B)Tests for valid codes
C)Redundant data checks
D)Tests of reasonableness

Question 23

Which of the following is true about control totals?

A)Usually expressed in dollars
B)Batches normally occur in groups of 200 or more
C)Should "make sense" to be useful
D)none of the above

Question 24

Because of the integrative nature of database systems, cost-effective controls on these systems are unimportant.

Question 25

A data field could pass all edit tests and still be invalid.Ad?ditional controls to cope with this would include:

A)Check digit
B)Unfound record test
C)Valid code test
D)a and b

Question 26

A completeness test is an internal equipment control to test whether or not all transactions have been processed.

Question 27

General controls within IT environments that affect personnel include:

A)Use of computer accounts
B)Separation of duties
C)Identifying suspicious behaviour of employees
D)all of the above affect personnel

Question 28

Which of the following control mechanisms is common to both observation and recording control:

A)Confirmation slips
B)Dual observation
C)Preprinted forms
D)Turn around document

Question 29

An internal label may be used only with magnetic tape systems.

Question 30

When they are not in use, tape and disk files should be stored apart from the computer room under the control of a librarian.

Question 31

Both external and internal file labels are useful in avoiding the use of the wrong input tape.

Question 32

When a company is setting up its accounting information system, it is important for management to select:

A)A standard set of com?puter control mechanisms
B)Only those controls which appear to serve its needs
C)Controls whose benefits exceed their costs
D)b and c only

Question 33

Which of the following is not a major reason for controls in a computerized accounting information system?

A)More data are processed
B)Often, computerized data are unreadable to the human eye
C)With computerized data, there is a higher possibility of computer crime
D)all of the above are reasons for controls

Question 34

Logical access to the computer system would be best controlled by:

A)Intrusion alarm systems
B)Complex operating systems
C)Restrictions on physical access to online terminals
D)Password codes

Question 35

A very effective ID approach for safeguarding logical computer access bases user recognition on:

A)IDA
B)Biometric identifications
C)Message acknowledgment procedures
D)Routing verification procedures

Question 36

Which of the following is not a feedback mechanism for observation controls for data collection?

A)Confirmation slips
B)Turn?around documents
C)Dual observation
D)Direct, 2-way communication devices

Question 37

Check digit control procedure have which of the following attributes?

A)Guarantees data validity
B)Detects fraudulent data
C)Always recommended for accounting information systems
D)none of the above

Question 38

Which of the following is not a processing control?

A)Record counts
B)Control totals
C)Hash totals
D)Check digits

Question 39

Which of the following is not a subcategory of input controls?

A)Observation, recording and transcription of data
B)Edit tests
C)Additional input controls
D)Data processing

Question 40

A limit check in a computer program is comparable to a decision that an individual makes in a manual system to judge a transaction's reasonableness.

Question 41

Fault-tolerant systems are typically based on the concept of:

A)Redundancy
B)Consistency
C)Materiality
D)Fairness

Question 42

An expense report was prepared by a company's cost centre.One executive questioned one of the amounts and asked for "the source documents which support the total." Data processing was not able to routinely do so.The best control procedure would be:

A)An error listing
B)An audit trail
C)Transmittal control
D)Documentation

Question 43

The basic form of backup used in magnetic tape operations is called:

A)Odd parity check
B)Dual-head processing
C)File protection rings
D)The grandfather-parent-child procedure

Question 44

Daylight Corporation's organization chart provides for a controller and an information processing manager, both of whom report to the financial vice-president.Internal control would not be strengthened by:

A)Assigning the programming and operating of the computer to an independent control group which reports to the controller
B)Providing for maintenance of input data controls by an independent control group which reports to the controller
C)Rotating periodically among machine operators the assignments of individual application runs
D)Provid?ing for review and distribution of computer output by an independent control group which reports to the controller

Question 45

Which of the following types of errors will check digits usually detect?

A)Transposition of two digits
B)Inaccuracy of one digit
C)Double mistakes canceling out each other
D)Fraudulent data

Question 46

Tape and disk output controls are primarily concerned with:

A)The storage space problem
B)Building control totals
C)Validating checksums
D)The encoding process

Question 47

_____________ are often based on the concept of redundancy.

A)File protection rings
B)Lock out procedures
C)Rollback processing
D)Fault-tolerant systems

Question 48

Principal output controls include all but one of the following:

A)Validation of processing results
B)Character control totals
C)Strict regulation of printed output
D)all of the above

Question 49

Which of the following best describes a fundamental control weakness often associated with automated data processing systems?

A)Automated? data processing equipment is more subject to systems error than manual processing is subject to human error
B)Automated data processing equipment processes and records similar transactions in a similar manner
C)Automated data processing procedures for detection of invalid and unusual transactions are less effective than manual control procedures
D)Functions that would normally be separated in a manual system are combined in an automated data processing system

Question 50

An apparent error in input data describing an inventory item received was referred back to the originating department for correction.A week later the department complained that the inventory in question was incorrect.Data processing could not easily determine whether or not the item had been processed by the computer.The best control procedure would be:

A)Input edit checks
B)Missing data validity check
C)Transmittal control
D)An error log

Question 51

The least effective physical security control for a computer centre is:

A)Limited employee access
B)Color-coded identification badges
C)Insurance
D)Strategic placement of computer centre equipment

Question 52

In its automated data processing system, a company might use self-checking numbers check digit)to enable detection of which of the following errors?

A)Assigning a valid identification code to the wrong customer
B)Recording an invalid customer's identification charge account number
C)Losing data between processing functions
D)Processing data arranged in the wrong sequence

Question 53

The grandfather-parent-child approach to providing protection for important computer files is a concept that is most often found in:

A)On?line, real-time systems
B)Manual systems
C)Magnetic tape systems
D)Magnetic disk systems

Question 54

A technique for controlling identification numbers part number, employee number, etc.)is:

A)Self-checking check)digits
B)Echo checks
C)Parity control
D)File protection

Question 55

Control totals are used as a basic method for detecting data errors.Which of the following is not a control figure used as a control total in automated accounting systems?

A)Non-financial totals
B)Check-digit totals
C)Hash totals
D)Financial totals

Question 56

Which of the following would lessen internal control in an automated data processing system?

A)The computer librarian maintains custody of computer program instructions and detailed listings
B)Computer operators have access to operator instructions and detailed program listings
C)The data control group is solely responsible for the distribution of all computer output
D)Computer programmers write and debug programs which perform routines designed by the systems analyst

Question 57

Which of the following is not normally used as a control total to check the validity of data processing activities?

A)Edit tests
B)Batch totals
C)Record counts
D)Hash totals

Question 58

From the standpoint of computer fraud, which type of controls would probably be of highest importance?

A)Input controls
B)Access controls
C)Output controls
D)Processing controls

Question 59

Which of the following is not a control to ensure the physical safety of a company's data processing centre?

A)Strategic placement of the computer centre
B)The use of password codes
C)The use of identification badges
D)all of the above are computer facility controls

Question 60

Which of the following is an example of application controls in automated data processing systems?

A)Input controls
B)Hardware controls
C)Documentation procedures
D)Controls over access to equipment and data files

Question 61

Transactions which were erroneous and had been previously rejected by the computer system apparently were not being re-entered and reprocessed once they had been corrected.This erroneous condition is best controlled by:

A)Comparing a record count of transactions input into the system
B)A comparison of the batch control totals
C)Scanning the error log
D)Scanning the console log
E)Desk checking

Question 62

The master inventory file, contained on a removable magnetic disk, was destroyed by a small fire next to the area where it was stored.The company had to take a special complete inventory in order to re-establish the file.The best control procedure would be:

A)Fire insurance
B)Data processing insurance
C)A copy of the disk
D)Remote storage of a copy of the disk and the transactions since the disk was copied

Question 63

In preparing payroll cheques, the computer omitted 24 of a total of 2,408 cheques which should have been processed.The error was not detected until the supervisor distributed the cheques.The best control procedure would be:

A)A parity check
B)A module N check
C)Control totals
D)Desk checking

Question 64

In order to maintain good internal control within the computer de?partment:

A)Computer operators need to be good programmers
B)Programmers should have control over day-to-day production runs
C)Computer operators should be allowed to make changes in programs as needed in order to keep the computer running
D)Programmers and computer operators should be in separate departments
E)The tape librarian should be able to operate the computer

Question 65

A CA reviews a client's payroll procedures.The CA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for:

A)Distributing payroll cheques to employees
B)Reviewing and approving time reports for subordinate employees
C)Hiring subordinate employees
D)Initiating requests for salary adjustments for subordinate employees

Question 66

Due to an unusual program error which had never happened before, the accounts receivable updating run did not process three transactions.The error was not noted by the operator because he was busy working on another project.There were control totals for the file which were printed out.An examination of the printout would have disclosed the error.The best control procedure would be:

A)An error message requiring operator response before processing continues
B)Reconciliation of control total by control clerk
C)Internal audit review of console log
D)Label checking by next computer program

Question 67

In an online, real-time system, which of the following would be most likely to be used as backup for an application's master file maintained on magnetic disk?

A)At specified periods the disk files would be dumped to copied on)magnetic tape along with the period's transactions
B)A duplicate disk file would be maintained and all activity would be copied on magnetic tape continuously
C)The grandfather-parent-child technique would be employed to retain disk files
D)All source documents for transactions would be retained
E)The disk files would be copied to magnetic tape continuously

Question 68

The magnetic tape containing accounts receivable transactions could not be located.A data processing supervisor said that it could have been put among the scratch tapes available for use in processing.The best control procedure would be aan):

A)Header label
B)Trailer label
C)External file label
D)File protection ring

Question 69

The master file for inventory did not seem right.The file was printed out and many errors were found.The best control procedure would be:

A)Trailer label control totals
B)A periodic test against physical count
C)A parity check
D)Limit tests

Question 70

In designing a payroll system it is known that no individual's paycheque can amount to more than $300 for a single week.As a result, the payroll program has been written to bypass writing a cheque and printing out an error message if any payroll calculation results in more than $300.This type of control is called:

A)A limit or reasonableness test
B)Error review
C)Data validity test
D)Logic sequence test

Question 71

A sales transaction document was coded with an invalid customer account code 7 digits rather than 8).The error was not detected until the updating run when it was found that there was no such account to which the transaction could be posted.The best control procedure would be:

A)Parity checks
B)Keypunch verification
C)A hash total check
D)A check digit

Question 72

It would be appropriate for the payroll accounting department to be responsible for which of the following functions?

A)Approval of employee time records
B)Maintenance of records of employment, discharges, and pay increases
C)Preparation of periodic governmental reports as to employees' earnings and withholding taxes
D)Distribution of paycheques to employees

Question 73

The operator, in mounting the magnetic tape containing the cash receipts for the processing run to update accounts receivable, mounted the receipts tape from the preceding rather than the current day.The error was not detected until after the processing run was completed.The best control procedure would be a:

A)Header label check
B)Trailer label check
C)Parity check
D)Hash total check

Question 74

For a routine management report produced on the computer, which one of the following control duties is most likely to be the sole responsibility of the user department?

A)Scanning the report for garbled output
B)Checking input totals against report totals
C)Determining that figures in the report are reasonable
D)Verifying record count totals
E)Checking the console listing for improper operator procedures

Question 75

A company uses the account code 669 for maintenance expense.However, one of the company's clerks often codes maintenance expense as 996.The highest account code in the system is 750.What would be the best internal control check to build into the company's computer program to detect this error?

A)A check for this type of error would have to be made before the information was transmitted to the data processing centre
B)Valid-character test
C)Sequence test
D)Valid-code test

Question 76

When erroneous data are detected by computer program controls, such data may be excluded from processing and printed on an error report.The error report should most probably be reviewed and followed up by the:

A)Supervisor of computer operations
B)Systems analyst
C)Data control group
D)Computer programmer

Question 77

Which of the following policies or practices is most likely to rep?resent a weakness in internal controls pertaining to an automated data processing system?

A)Computer operators are denied access to the system/program documentation library
B)Employees in the data processing department are prohibited from initiating requests for changes to master files
C)Computer programmers are permitted to operate the computer for regular processing runs which involve pro?grams that they have written
D)Computer operators who run the pro?grams related to inventory are prohibited from making test counts of goods on hand in order to check the accuracy of the computer in?ventory files
E)All corrections of errors in the master file are reviewed and approved by a supervisory-level employee who is inde?pendent of the data processing department

Question 78

A weekly payroll cheque was issued to an hourly employee based on 98 hours worked instead of 38 hours.The time card was slightly illegible and the number looked somewhat like 98.The best control procedure would be:

A)A hash total
B)A code check
C)Desk checking
D)A limit test

Question 79

A transaction involving a charge to a non-existent customer account was entered into an accounts receivable and billing system that was batch processed.This error should be detected by the computer sys?tem and appear in:

A)The sort run error printout
B)The edit run error printout
C)The customer statements printout
D)The master file update run error printout
E)Some error printout other than those mentioned above

Question 80

Jonkers, Inc., a large retail chain, is installing a computerized accounts receivable system employing a batch mode of processing with sequential files.The program which will process receipts on account should include an input edit routine to assure:

A)Proper sequencing of data
B)Header and trailer label accuracy
C)The amount received is recorded correctly
D)The existence of control totals
E)Proper operator intervention