8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

Quiz 1: Auditing and Internal Control / IT

Governance Controls
* Required

Multiple Choice

Select the best answer.

All of the following are control risks associated with the distributed data 1 point
processing structure except *

a. lack of separation of duties

b. system incompatibilities

c. system interdependency

d. lack of documentation standards

Which statement is not true? * 1 point

a. Auditors must maintain independence.

b. IT auditors attest to the integrity of the computer system.

c. IT auditing is independent of the general financial audit.

d. IT auditing can be performed by both external and internal auditors.

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8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

When planning the audit, information is gathered by all of the following 1 point
methods except *

a. completing questionnaires

b. interviewing management

c. observing activities

d. confirming accounts receivable

Some companies separate systems analysis from programming/program 1 point

maintenance. All of the following are control weaknesses that may occur
with this organizational structure except *

a. systems documentation is inadequate because of pressures to begin coding a new

program before documenting the current program

b. illegal lines of code are hidden among legitimate code and a fraud is covered up for
a long period of time

c. a new systems analyst has difficulty in understanding the logic of the program

d. inadequate systems documentation is prepared because this provides a sense of

job security to the programmer

The bank reconciliation uncovered a transposition error in the books. This 1 point
is an example of a *

a. preventive control

b. detective control

c. corrective control

d. none of the above

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8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

Which of the following is not a limitation of the internal control system? * 1 point

a. errors are made due to employee fatigue

b. fraud occurs because of collusion between two employees

c. the industry is inherently risky

d. management instructs the bookkeeper to make fraudulent journal entries

The fundamental difference between internal and external auditing is that * 1 point

a. internal auditors represent the interests of the organization and external auditors
represent outsiders

b. internal auditors perform IT audits and external auditors perform financial

statement audits

c. internal auditors focus on financial statement audits and external auditors focus on
operational audits and financial statement audits

d. external auditors assist internal auditors but internal auditors cannot assist
external auditors

Segregation of duties in the computer-based information system includes 1 point

*

a. separating the programmer from the computer operator

b. preventing management override

c. separating the inventory process from the billing process

d. performing independent verifications by the computer operator

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8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

All of the following are recommended features of a fire protection system 1 point
for a computer center except *

a. clearly marked exits

b. an elaborate water sprinkler system

c. manual fire extinguishers in strategic locations

d. automatic and manual alarms in strategic locations

Which of the following is a preventive control? * 1 point

a. credit check before approving a sale on account

b. bank reconciliation

c. physical inventory count

d. comparing the accounts receivable subsidiary ledger to the control account

All of the following are issues of computer security except * 1 point

a. releasing incorrect data to authorized individuals

b. permitting computer operators unlimited access to the computer room

c. permitting access to data by unauthorized individuals

d. providing correct data to unauthorized individuals

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8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

Which organizational structure is most likely to result in good 1 point

documentation procedures? *

a. separate systems development from systems maintenance

b. separate systems analysis from application programming

c. separate systems development from data processing

d. separate database administrator from data processing

An accounting system that maintains an adequate audit trail is 1 point

implementing which internal control procedure? *

a. access controls

b. segregation of functions

c. independent verification

d. accounting records

In a computer-based information system, which of the following duties 1 point

needs to be separated? *

a. program coding from program operations

b. program operations from program maintenance

c. program maintenance from program coding

d. all of the above duties should be separated

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8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

Which of the following is the best reason to separate duties in a manual 1 point

system? *

a. to avoid collusion between the programmer and the computer operator

b. to ensure that supervision is not required

c. to prevent the record keeper from authorizing transactions

d. to enable the firm to function more efficiently

Which is the most critical segregation of duties in the centralized 1 point

computer services function? *

a. systems development from data processing

b. data operations from data librarian

c. data preparation from data control

d. data control from data librarian

Which of the following situations is not a segregation of duties violation? * 1 point

a. The treasurer has the authority to sign checks but gives the signature block to the
assistant treasurer to run the check-signing machine.

b. The warehouse clerk, who has the custodial responsibility over inventory in the
warehouse, selects the vendor and authorizes purchases when inventories are low.

c. The sales manager has the responsibility to approve credit and the authority to
write off accounts.

d. The department time clerk is given the undistributed payroll checks to mail to
absent employees.

e. The accounting clerk who shares the record keeping responsibility for the accounts
receivable subsidiary ledger performs the monthly reconciliation of the subsidiary
ledger and the control account.

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8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

Inherent risk * 1 point

a. exists because all control structures are flawed in some ways.

b. is the likelihood that material misstatements exist in the financial statements of the
firm.

c. is associated with the unique characteristics of the business or industry of the

client.

d. is the likelihood that the auditor will not find material misstatements.

Typically, internal auditors perform all of the following tasks except * 1 point

a. IT audits

b. evaluation of operational efficiency

c. review of compliance with legal obligations

d. internal auditors perform all of the above tasks

The financial statements of an organization reflect a set of management 1 point

assertions about the financial health of the business. All of the following
describe types of assertions except *

a. that all of the assets and equities on the balance sheet exist

b. that all employees are properly trained to carry out their assigned duties

c. that all transactions on the income statement actually occurred

d. that all allocated amounts such as depreciation are calculated on a systematic and
rational basis

A copy of your responses will be emailed to the address you provided.

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8/27/2021 Quiz 1: Auditing and Internal Control / IT Governance Controls

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