Question 1

Petty cash is disbursed by the Manuela Luisina in the Cashier's Office.Manuela also maintains records of disbursements,places requests to the Finance Department to replace expended funds,and periodically reconciles the petty cash balance.This represents a(n)________ segregation of duties.

Accepted Answer

Having the same individual handle disbursement, record-keeping, fund replenishment requests, and reconciliation does not effectively segregate duties, increasing the risk of errors or fraud.

Question 2

The Director of Information Technology for the city of Tampa,Florida formed a company to sell computer supplies and software.All purchases made on behalf of the City were made from her company.She was later charged with fraud for overcharging the City,but was not convicted by a jury.The control issue in this case arose because the Director had both ________ and ________ duties.

Accepted Answer

The control issue in this case arose because the Director had both recording and authorization duties. As the Director of Information Technology, she was responsible for recording purchases made on behalf of the City, and as the owner of the company selling computer supplies and software, she had authority to make those purchases. This created a conflict of interest and allowed her to overcharge the City, which is why she was charged with fraud.

Question 3

Explain how a company could be the victim of fraud,even if ideal segregation of duties is enforced.

Accepted Answer

The answer of Explain how a company could be the...

Question 4

An accounting policy that requires a purchasing manager to sign off on all purchases over $10,000 is an example of

Accepted Answer

This is an example of specific authorization as it applies to a specific dollar threshold and a specific role (purchasing manager) within the organization. General authorization would be broader and apply to a range of activities or individuals, while special or generic authorization are not commonly used terms in accounting.

Question 5

The examination of the relationships between different sets of data is called

Accepted Answer

Analytical reviews involve examining the relationships between different sets of data to identify potential discrepancies or unusual fluctuations. Top-level reviews, reconciliation of independently maintained records, and comparison of actual quantities with recorded amounts are also important audit procedures, but they do not specifically involve the examination of relationships between data sets.

Question 6

Which of the following is an independent check on performance?

Accepted Answer

The General Manager comparing budgeted amounts with expenditure records from all departments is an independent check on performance as it ensures that the actual expenditures do not go beyond the budgeted amounts. This is done by someone who is not directly involved in the actual expenditures, thus providing an independent review of the organization's financial performance. Options A and B involve internal quality control measures while option D involves an internal control procedure.

Question 7

Of the following examples of fraud,which will be the most difficult to prevent and detect? Assume the company enforces adequate segregation of duties.

Accepted Answer

The fraud in choice D involves collusion between two employees, making it more difficult to detect than fraud committed by a single person. Additionally, the amounts written off as bad debt are likely to be relatively small, making it more difficult to identify the fraud through analysis of financial records. Adequate segregation of duties can help prevent this type of fraud, but detection may require more proactive measures such as monitoring of credit card usage or rotation of job responsibilities.

Question 8

A ________ is created to guide and oversee systems development and acquisition.

Accepted Answer

A steering committee is a group of individuals responsible for overseeing a project or program, often with representatives from various departments or stakeholders. In the context of systems development and acquisition, a steering committee would provide guidance and direction, ensuring that the project is on track and meeting its objectives. The other options listed - performance evaluation, project development plan, and strategic master plan - are all important components of project management, but are not specific to systems development or acquisition.

Question 9

Hiring decisions at Maarja's Razors are made by Maimu Maarja,the Director of Human Resources.Pay rates are approved by the Vice President for Operations.At the end of each pay period,supervisors submit time cards to Kasheena,who prepares paycheck requisitions.Paychecks are then distributed through the company's mail room.This represents a(n)________ segregation of duties.

Accepted Answer

This represents an effective segregation of duties because different individuals are responsible for different tasks related to the payment of employees. Maimu Maarja makes hiring decisions, the Vice President for Operations approves pay rates, and Kasheena prepares paychecks. By having different individuals responsible for different tasks, the company reduces the risk of errors or fraud. Additionally, the use of the mail room to distribute paychecks adds another layer of separation and reduces the risk of unauthorized access to sensitive information.

Question 10

In a system with effective separation of duties,it is difficult for any single employee to embezzle successfully.

Accepted Answer

Effective separation of duties ensures that no one employee has complete control over a process or transaction. This means that multiple employees would be involved in a transaction, making it difficult for any single employee to engage in fraudulent activity such as embezzlement without being detected by others. Therefore, this statement is true.

Question 11

Which of the following is a control related to design and use of documents and records?

Accepted Answer

Sequentially prenumbering sales invoices helps to ensure that all sales are accurately documented and accounted for, preventing the possibility of transactions being overlooked or duplicated. This is a control related to the design and use of documents and records.

Answers A, C, and D are controls related to other areas such as physical security, cash and bank account reconciliation, and inventory management, respectively.

Question 12

Describe the differences between general and specific authorization.

Accepted Answer

The answer of Describe the differences between general and specific...

Question 13

A ________ shows how a project will be completed,including tasks and who will perform them as well as a timeline and cost estimates.

Accepted Answer

A project development plan outlines the tasks and responsibilities associated with completing a project, as well as the timeline and estimated costs associated with each component. It is a valuable tool for ensuring that a project stays on track and can be completed efficiently and effectively. Performance evaluations are typically used to assess the quality of someone's work, while steering committees and strategic master plans are broader management tools that may be related to projects but are not specific to them.

Question 14

A document that shows all projects that must be completed and the related IT needs in order to achieve long-range company goals is known as a

Accepted Answer

A strategic master plan is a long-term plan that outlines organizational goals and objectives, and the strategies and actions needed to achieve them. It includes all projects that must be completed and related IT needs, making it the appropriate choice for this scenario. A performance evaluation assesses an employee's performance, a data processing schedule outlines the times and tasks for processing data, and a project development plan outlines the details of a specific project.

Question 15

The organization chart for Renata Corporation includes a controller and an information processing manager,both of whom report to the vice president of finance.Which of the following would be a control weakness?

Accepted Answer

Assigning both programming and operating responsibilities to an independent control group that reports to the controller creates a segregation of duties issue, as it combines the design and execution functions, potentially compromising system integrity.

Question 16

Explain how a company could safeguard its assets,records,and data.

Accepted Answer

The answer of Explain how a company could safeguard its...

Question 17

Detecting fraud where two or more people are in collusion to override controls is less difficult because it is much easier to for one or more fraud perpetrators to reveal the fraud.

Accepted Answer

Detecting fraud involving collusion is more difficult because multiple individuals working together can more effectively cover up their fraudulent activities and circumvent controls that are designed to prevent or detect fraud by a single individual.

Question 18

A store policy that allows retail clerks to process sales returns for $1,000 or less,with a receipt dated within the past 30 days,is an example of

Accepted Answer

General authorization refers to a policy or rule that applies broadly within an organization, allowing certain actions to be taken by employees without needing specific, individual approval for each instance. In this case, the policy allowing retail clerks to process sales returns for $1,000 or less with a receipt dated within the past 30 days is an example of a general rule that applies to all relevant transactions, fitting the definition of general authorization.

Question 19

With a limited work force and a desire to maintain strong internal control,which combination of duties would result in the lowest risk exposure?

Accepted Answer

Separating the duties of entering payments to vendors in the cash disbursements journal and entering cash received from customers in the cash receipts journal results in the lowest risk exposure. This is because it separates the handling of incoming and outgoing cash, reducing the risk of errors or fraud. The other options involve combining duties, which increases the risk of errors, fraud, or the potential for internal control weaknesses.

Question 20

Which of the following duties could be performed by the same individual without violating segregation of duties controls?

Accepted Answer

Segregation of duties is designed to prevent conflicts of interest and reduce the risk of errors or fraud by dividing responsibilities among different individuals. In option A, approving accounting software change requests and testing production scheduling software changes involve different systems and processes, which means the same individual could perform both tasks without violating segregation of duties controls. The other options involve tasks that should be separated to ensure checks and balances within the same system or related processes.

Quiz 7: Control and Accounting Information Systems

Petty cash is disbursed by the Manuela Luisina in the Cashier's Office.Manuela also maintains records of disbursements,places requests to the Finance Department to replace expended funds,and periodically reconciles the petty cash balance.This represents a(n) ________ segregation of duties.