Question 1

The comparison of actual and budgeted figures and the conduct of variance analysis to determine the source of the variance is a type of:
A)General control
B)Information processing control
C)Performance review
D)Application control

Accepted Answer

The comparison of actual and budgeted figures and the conduct of variance analysis is a type of performance review. This involves evaluating the organization's performance against predetermined goals and objectives. It is a way to identify areas where the organization is underperforming and take corrective actions. The other options, such as general control, information processing control, and application control, are not related to this specific activity.

Question 2

In terms of proper recording of transactions,accuracy is concerned with making sure that: (i)all data that enter the system are in the correct format (ii)all data that enter the system are of the right type (iii)all data are stored in a secured place to prevent unauthorised manipulation (iv)the data gathered accurately reflect the reality of the underlying transaction or event.
A)(i)(ii)
B)(i)(ii)(iii)
C)(i)(ii)(iv)
D)(i)(ii)(iii)(iv)

Accepted Answer

Option (i) and (ii) are necessary for accuracy in recording transactions. Option (iii) addresses security concerns and is not directly related to accuracy. Option (iv) is crucial for ensuring that the recorded transactions reflect the reality of the underlying event, and is necessary for accuracy. Therefore, the best choice is (i)(ii)(iv).

Question 3

Which of the following is not a type of controls classified in the Australian Auditing Standard ASA 315?
A)Authorisation
B)Performance review
C)Risk control
D)Segregation of duties

Accepted Answer

The Australian Auditing Standard ASA 315 includes three types of controls: (1) Entity-level controls, (2) IT general controls, and (3) Control activities. Risk control is not a type of controls classified in ASA 315.

Question 4

An antivirus program scans and monitors files in a computer continuously for viruses.This is an example of:
A)Preventive control
B)Detective control
C)Corrective control
D)Application control

Accepted Answer

Detective control is designed to identify and alert the occurrence of an error, misstatement, or fraud. In this case, the antivirus program scanning and monitoring files continuously serves as a detective control by identifying potential viruses.

Question 5

Which of the following is a risk to the financial statement of a company when it places a purchase order with a supplier?
A)the supplier delivers the goods with an invoice instead of a delivery note
B)the goods are not available
C)the supplier delivers the wrong goods or wrong quantity
D)the purchasing officer orders the wrong goods.

Accepted Answer

If the supplier delivers the wrong goods or wrong quantity, it can lead to incorrect inventory records and financial discrepancies in the company's financial statements.

Question 6

With respect to the recording of transactions,which of the following statements is true?
A)Proper recording of transactions is essentially about completeness.
B)Proper recording of transactions is essentially about accuracy.
C)Proper recording of transactions is essentially about storing data in only one place.
D)None of the options are correct.

Accepted Answer

Proper recording of transactions is about both completeness and accuracy, but accuracy is more essential as it ensures that the financial statements are reliable and can be used for decision-making. Storing data in only one place is not necessarily a requirement for proper recording, as long as the data is properly documented and can be easily accessed and tracked.

Question 7

Which of the following is NOT a major aim of a computerised accounting information system?
A)Proper authorisation.
B)Timeliness.
C)Proper recording.
D)User friendly.

Accepted Answer

User friendly is not a major aim of a computerised accounting information system, although it may be a desirable feature. The major aims are proper authorisation, timeliness, and proper recording.

Question 8

Segregation of duties is a principle that applies to which sections of an organisation?
A)throughout the organisation including office staff,accountants and IT workers
B)accountants
C)office staff who have to deal with money matters
D)programmers and computer support staff who could interfere with the accounting information system

Accepted Answer

Segregation of duties is a principle that should be applied throughout an organization, including office staff, accountants, and IT workers. This ensures that no one individual has complete control over a transaction from start to finish, reducing the risk of fraud or error.

Question 9

Information processing controls are those that are put in place within the organisation to work towards the _______ of transactions.
A)efficiency,effectiveness,and accuracy
B)timeliness,efficiency,and completeness
C)accuracy,completeness,and authorisation
D)authorisation,processing,accuracy

Accepted Answer

Information processing controls are designed to ensure the accuracy, completeness, and authorization of transactions within an organization. These controls help in maintaining the integrity and reliability of data processing operations.

Question 10

Authorisation in a computerised information system can be established through: (i)user privileges (ii)user access rights (iii)restrictions on what different users are able to do within the system.
A)(i)(iii)
B)(ii)(iii)
C)(i)(ii)
D)(i)(ii)(iii)

Accepted Answer

All three options (user privileges, user access rights, and restrictions on user actions) contribute to establishing authorisation in a computerised information system. Therefore, the best choice is D.

Question 11

Which aspect of document collection are pre-numbered documents used to establish?
A)input data is accurate
B)data from source documents is recorded in a timely manner
C)all source documents are accounted for
D)all source documents have been authorised

Accepted Answer

Pre-numbered documents are used to establish that all source documents have been accounted for. The numbering system helps to ensure that no document is lost or duplicated in the collection process. They do not necessarily establish the accuracy of input data, timeliness of recording, or authorisation of source documents.

Question 12

Control of access to the server for the company database is an example of which type of control?
A)input
B)general
C)processing
D)performance

Accepted Answer

Control of access to the server for the company database is an example of general control, which encompasses activities designed to ensure that an organization's overall control environment is stable and well-managed. General controls provide an environment of control that affects multiple applications and support the effective functioning of application and data-related controls.

Question 13

A computer virus is found in a file in the computer system.Because a solution for recovering the file is not yet available,the infected file is quarantine by the antivirus software.Quarantining the infected file is an example of:
A)Preventive control
B)Detective control
C)Corrective control
D)None of the options are correct.

Accepted Answer

Quarantining the infected file is an example of a preventive control because it prevents the virus from spreading to other files or systems.

Question 14

Checking customer details before finalising a sales order is an example of a ________ control.
A)input
B)general
C)processing
D)performance

Accepted Answer

Checking customer details before finalizing a sales order is part of input controls, which verify the accuracy, completeness, and authenticity of data input into the system. Input controls are designed to prevent errors and omissions at the source and ensure data quality. General controls relate to the overall security and management of the system, processing controls relate to proper processing of data, and performance controls relate to the efficiency and effectiveness of the system.

Question 15

Internal controls are necessary in all businesses because …
A)business processes do not always go to plan
B)employees are basically corrupt
C)financial statements only contain assertions
D)external auditors insist on them

Accepted Answer

Internal controls are necessary in all businesses because business processes do not always go to plan. These controls provide reasonable assurance that business objectives will be achieved even when unforeseeable events occur. The other options are incorrect because not all employees are corrupt, financial statements contain more than assertions, and although external auditors may require internal controls, they are not the sole reason for their existence.

Question 16

Purchasing goods over the Internet would fit into which of the following categories of processing?
A)Batch
B)online real-time
C)online data collection batched for later processing
D)Shopping basket

Accepted Answer

The answer of Purchasing goods over the Internet would fit...

Question 17

How does a computer system know that a sales manager has authorised a credit transaction over $1000?
A)The input terminal has bio-security check eg retina scanning.
B)A combination of checks on the size of the credit required and the access rights of the manager when she logged in with her username and password
C)The system must insist on the sales manager entering the transaction
D)The control comes from the work practices outside the computer

Accepted Answer

The computer system can check the size of the credit transaction and the access rights of the sales manager when they log in with their username and password. This can be used as a form of authorization for the credit transaction over $1000. Additionally, the system may also require the sales manager to manually enter their approval for the transaction. However, this option is not as foolproof as a combination of checks on the size of the credit required and the access rights of the manager. The other two options (A and D) are not necessarily applicable in all industries or situations.

Question 18

After identifying risks,management will decide on appropriate policies and procedures to address the risks.These policies and procedures are called:
A)control policies
B)control activities
C)control procedures
D)control processes

Accepted Answer

Control activities refer to the policies and procedures established by management to address the identified risks. Control policies and control procedures are subsets of control activities, while control processes refer to the overall risk management and control framework. Therefore, the most appropriate answer is B - control activities.

Question 19

Checking for accuracy is performed by ____________ checks.
A)edit
B)range
C)reasonableness
D)all of the above

Accepted Answer

All of the given choices (edit, range, and reasonableness) are various methods for checking the accuracy of data or calculations. Therefore, the best choice is D, which includes all of the above.

Question 20

Which of the following is an example of a turnaround document?
A)balance sheet
B)sales order
C)remittance advice
D)payslip

Accepted Answer

A turnaround document is a document that is generated by a computer system and then returned to the computer system for processing. Remittance advice is an example of a turnaround document as it is generated by the payer and then returned to the payee's computer system to apply the payment to the appropriate account. Balance sheet, sales order, and payslip are not examples of turnaround documents.

Quiz 8: Internal Controls II

The comparison of actual and budgeted figures and the conduct of variance analysis to determine the source of the variance is a type of:

Which of the following is not a type of controls classified in the Australian Auditing Standard ASA 315?

An antivirus program scans and monitors files in a computer continuously for viruses.This is an example of:

Which of the following is a risk to the financial statement of a company when it places a purchase order with a supplier?

With respect to the recording of transactions,which of the following statements is true?

Which of the following is NOT a major aim of a computerised accounting information system?

Segregation of duties is a principle that applies to which sections of an organisation?

Information processing controls are those that are put in place within the organisation to work towards the _______ of transactions.

Authorisation in a computerised information system can be established through: (i) user privileges (ii) user access rights (iii) restrictions on what different users are able to do within the system.

Which aspect of document collection are pre-numbered documents used to establish?

Control of access to the server for the company database is an example of which type of control?

A computer virus is found in a file in the computer system.Because a solution for recovering the file is not yet available,the infected file is quarantine by the antivirus software.Quarantining the infected file is an example of:

Checking customer details before finalising a sales order is an example of a ________ control.

Internal controls are necessary in all businesses because …

Purchasing goods over the Internet would fit into which of the following categories of processing?

How does a computer system know that a sales manager has authorised a credit transaction over $1000?

After identifying risks,management will decide on appropriate policies and procedures to address the risks.These policies and procedures are called:

Checking for accuracy is performed by ____________ checks.

Which of the following is an example of a turnaround document?