Information Technology Auditing Exam Preparation Guide
Course Introduction
Information Technology Auditing focuses on the principles, techniques, and methodologies used to evaluate and ensure the effectiveness, reliability, and security of an organizations information systems. The course covers topics such as IT governance, risk management, internal control frameworks, regulatory compliance, and audit planning. Students learn how to identify and assess risks related to information assets, design audit procedures, use audit software, and interpret findings to provide recommendations that enhance system security and organizational performance. Through case studies and practical exercises, students gain hands-on experience in performing IT audits in various business environments.
Recommended Textbook
Accounting Information Systems 4th Edition by Robert Hurt
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Chapter 2: Role and Purpose of Accounting Information Systems
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Q1) AIS study sometimes involves questions with deterministic answers.Which of the following questions is most likely to have a deterministic answer?
A)How should a company record the purchase of supplies on account in its AIS?
B)In a corporation with sales of $100,000 annually, what dollar amount should be considered material?
C)Which processing tools should the AIS use?
D)Has the conceptual framework achieved the FASB's original objective for developing it?
Answer: A
Q2) Storage is one generic element of the AIS; the text explains that data stored electronically often are grouped into three types of files.Which of the following includes three examples of the same file type?
A)Purchases, cash receipts, sales
B)Inventory, cash receipts, sales
C)Purchases, cash, sales
D)Inventory, cash, sales
Answer: A
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Chapter 3: Transaction Processing in the Ais
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Q1) Human judgment is important in which of the following AIS tasks: (i) designing source documents, (ii) recognizing recordable transactions.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Answer: C
Q2) The definition of accounting has three principal elements.Which of the following is not one of them?
A)Distinguishing relevant from irrelevant information
B)Calculating amounts to record in the AIS
C)Reporting financial results
D)Using the information to make informed judgments
Answer: D
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4
Chapter 4: Internal Controls
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Q1) When employees of the City of Fenris need supplies, they fill out a purchase requisition and send it to the city's purchasing department.The purchasing agents consolidate requisitions for similar supplies and prepare a purchase order to send to a vendor.The vendor ships the supplies directly to the purchasing department and then bills the city.Accounting clerks pay vendor invoices within thirty days.Within the context of that business process, which of the following best pairs a risk with an internal control that will address the risk?
A)Purchasing supplies from an unauthorized vendor, separation of duties
B)Paying for supplies that were not received, document matching
C)Receiving supplies that were not ordered, limit checks
D)Requisitioning supplies that are not needed, pre-numbered purchase requisitions
Q2) Violating the provisions of the Foreign Corrupt Practices Act most directly subjects an organization to what kind of risk from Brown's taxonomy?
A)Financial
B)Operational
C)Strategic
D)Inherent
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Page 5
Chapter 5: Management Concepts
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Q1) "Control activities" are one element of the COSO ERM framework.To develop control activities, organizations may need to apply: (i) the FASB Conceptual Framework, (ii) expectancy theory, (iii) the generalized model of business process management. A)(i) and (ii) only B)(ii) and (iii) only C)(i) and (iii) only D)(i), (ii) and (iii)
Q2) Which of the following best pairs an element of the COSO enterprise risk management framework with an example of that element?
A)Objective setting, determining which elements of the COSO framework to use
B)Event identification, identifying needed internal controls
C)Risk assessment, annual management retreats focused on the ERM plan
D)Risk response, diversifying risk by expanding internationally
Q3) ___ comprises seven interrelated elements.
A)The COSO enterprise risk management framework
B)The generalized model of business process management
C)Expectancy theory
D)All of these
Q4) List and discuss three basic principles of business process management.
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Chapter 6: Information Systems Concepts
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Q1) Raul was leading a team charged with developing a new system for budgeting.The formation of the team indicates that which step of the SDLC has been completed?
A)Initiation/planning
B)Requirements analysis
C)Design
D)Build
Q2) The chapter discussed four macro-level and four micro-level factors that should be considered when evaluating information technology for use in the accounting information system.It also discussed Sylla and Wen's three-stage process for evaluating information technology investments.Which of the following best pairs a micro-level factor with a level from the Sylla and Wen framework?
A)Strategic fit, intangible benefits evaluation
B)Cost, tangible benefits evaluation
C)Both strategic fit, intangible benefits evaluation and cost, tangible benefits evaluation
D)Neither strategic fit, intangible benefits evaluation nor cost, tangible benefits evaluation
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Chapter 7: Flowcharting
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Q1) In which of the following situations would a document flowchart be appropriate?
A)Documenting the steps in a financial statement audit
B)Tracing the flow of a bank deposit slip
C)Both documenting the steps in a financial statement audit and tracing the flow of a bank deposit slip
D)Neither documenting the steps in a financial statement audit nor tracing the flow of a bank deposit slip
Q2) Documents involved in a business process should have a clear termination.Which of the following best applies that principle?
A)An arrow connecting a document with a filing symbol
B)A document moving between columns in a flowchart
C)Both an arrow connecting a document with a filing symbol and a document moving between columns in a flowchart
D)Neither an arrow connecting a document with a filing symbol nor a document moving between columns in a flowchart
Q3) Explain, in no more than ten sentences, the process depicted in the following flowchart:
Q4) Please refer to the following flowchart as you respond to the next problem:
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Page 8
Chapter 8: Data Flow Diagramming
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Q1) Booksellers of Bufluffia is a small, independent bookstore that both publishes and sells very specialized titles.They currently have about 50 clients; they publish and sell 30 different books at present.The company's management has asked you to create database tables to support their operations.The database is likely to contain all of the following tables except:
A)Clients
B)Sales
C)Inventory
D)Bookstore
Q2) Which of the following statements about systems flowcharts and data flow diagrams is most true?
A)Processes are numbered in a flowchart, but not in a data flow diagram.
B)Processes are numbered in a data flow diagram, but not in a flowchart.
C)Processes are numbered in both flowcharts and data flow diagrams.
D)Processes are unnumbered in both flowcharts and data flow diagrams.
Q3) Data flow diagrams incorporate four symbols.List the symbols; for each one, give two examples of how it might be used in a DFD.
Q4) List and discuss two ways data flow diagrams are used in accounting information systems work.
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Chapter 7: Rea Modeling
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Q1) An accounting information system captures data that are eventually grouped by account, and then used to prepare general purpose financial statements.The system could be described as:
A)A view-driven AIS.
B)An event-driven AIS.
C)Either a view-driven AIS or an event-driven AIS.
D)Neither a view-driven AIS nor an event-driven AIS.
Q2) Data in a view-driven accounting information system are:
A)Highly aggregated.
B)Stored in a single place.
C)Both highly aggregated and stored in a single place
D)Neither highly aggregated nor stored in a single place
Q3) Enforcing ___ tells a database to update a junction table whenever separate tables are updated.
A)Internal control
B)Referential integrity
C)The accounting cycle
D)Expectancy theory
Q4) List five weaknesses associated with view-driven accounting information systems.
Q5) In your own words, explain the steps used to create a REA model.
Page 10
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Chapter 8: XBRL
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Q1) COSO published two integrated frameworks to assist organizations in managing risk and developing internal controls.Organizations adopting XBRL could use:
A)The risk management framework only.
B)The internal control framework only.
C)Both the risk management and internal control frameworks.
D)Neither the risk management nor the internal control framework.
Q2) Internal controls have four fundamental purposes.Which of the following pairs an internal control for XBRL with an appropriate purpose of internal control?
A)Centralized approval process for taxonomy additions, encouraging compliance with management directives
B)Daily data backups, safeguarding assets
C)Both centralized approval process for taxonomy additions, encouraging compliance with management directives and daily data backups, safeguarding assets
D)Neither centralized approval process for taxonomy additions, encouraging compliance with management directives nor daily data backups, safeguarding assets
Q3) Explain the structure of XBRL, including its relationship to XML.
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Chapter 9: E-Business and Enterprise Resource Planning Systems
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Q1) TNS Corporation had been doing business via traditional brick-and-mortar methods for many years, then decided to expand into e-business.Based on the benefits and costs of e-business listed in the text, which of the following numbers is likely to increase?
A)Sales
B)Profits
C)Prepaid assets
D)Retained earnings
Q2) JRS Corporation attempted to install an enterprise resource planning system with very poor results.The project took significantly longer than expected; actual costs exceeded budgeted costs by a significant margin.In addition, the system has been poorly utilized because it was never completed.The management of JRS has hired you to bring the project to a successful completion.Write a letter to management explaining three common causes of ERP implementation failure; also make four recommendations that will help them be more successful with the implementation now.
Q3) List and briefly discuss five major forms of e-business.
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Page 12
Chapter 10: Computer Crime and Information Technology Security
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Q1) According to ISACA, which COBIT enabler focuses on an often underestimated success factor in governance and management activities?
A)principles, policies and frameworks
B)culture, ethics and behavior
C)services, infrastructure and applications
D)people, skills and competencies
Q2) Consider the following examples of computer crime as you answer the question:
i.Social Security numbers are stolen from a company's database.ii.A fraudster uses a computer to identify people over the age of 80 with annual incomes of $250,000 or more.iii.An employee receives threats from a co-worker via e-mail.iv.An unhappy customer launches a denial-of-service attack.Carter's taxonomy of computer crime comprises four categories.Which of the following statements is most true?
A)The list includes examples of all four categories.
B)The list includes examples of all categories except associated.
C)The list includes examples of all categories except target.
D)The list includes examples of all categories except incidental.
Q3) List the elements of Carter's taxonomy of computer crime.
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Page 13
Chapter 11: Salescollection Process
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Q1) Consider the following short case as you respond to the question: VLC Corporation sold merchandise with a cost of $200 on account for $300 to PRT Corporation; credit terms were 2/10, n/30.VLC paid the outgoing freight charge of $10.PRT paid the invoice within the discount period.Assume VLC's general ledger showed a balance in cash of $600 before the preceding events; assume VLC's balance in inventory was also $600.Which of the following statements is most true?
A)After recording the preceding events, the balance in cash will be equal to the balance in inventory.
B)After recording the preceding events, the balance in cash will be greater than the balance in inventory.
C)After recording the preceding events, the balance in cash will be less than the balance in inventory.
D)After recording the preceding events, the balance in cash will equal the balance in accounts receivable.
Q2) Prepare a narrative description of the sales/collection process depicted in the systems flowchart below.Then, identify three risk exposures for the company's sales/collection process; for each risk exposure, suggest one internal control you would implement.
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Page 14
Chapter 12: Acquisitionpayment Process
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Q1) Which of the following can serve as both an input to and an output of the acquisition/payment process?
A)Check
B)Purchase order
C)Both check and purchase order
D)Neither check nor purchase order
Q2) The acquisition/payment process helps an organization create value for its stakeholders.Which of the following authors developed a model that assists in understanding value creation?
A)Porter
B)Vroom
C)Pacioli
D)Gates
Q3) Accounting information systems have five generic parts.Outputs of the acquisition/payment process can include:
A)Schedule of accounts payable.
B)Checks.
C)Both schedule of accounts payable and checks.
D)Neither schedule of accounts payable nor checks.
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Page 15
Chapter 13: Other Business Processes
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Q1) Missouri Can Corporation (MCC) manufactures and sells a variety of can types, such as soft drink cans, oil cans and many others.MCC has adopted a functional organization structure that includes departments for accounting, marketing, manufacturing, human resources and information systems.Which of the following departments deal with support activities in Porter's value chain?
A)information systems and human resources
B)marketing and manufacturing
C)information systems and marketing
D)human resources and manufacturing
Q2) Accounting information systems have five basic elements.Which of the following is an output of the human resources process?
A)A payroll check
B)A written performance evaluation
C)Both a payroll check and a written performance evaluation
D)Neither a payroll check nor a written performance evaluation
Q3) Create specifications (table names and field names) for all database tables indicated by the REA model below.
Q4) Create a narrative description of the REA model shown below.
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Page 16
Chapter 14: Decision-Making Models and Knowledge Management
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Q1) Consider the following independent situations as you answer the questions:
A.Irene, a freshman accounting major, thought she would benefit from reading an intermediate accounting text while taking introductory financial accounting.
B.Bradley developed a plan to study for all four parts of the CPA exam during his last semester at college, thus making himself ready to take the exam immediately after graduation.
C.Jorge met weekly with a group of five students, all of whom were preparing their resume for the very first time.
D.Every time Maria encountered a topic she did not understand in her accounting information systems course, she did a Google search for it.Which decision makers are experiencing information overload due to information characteristics?
A)Irene only.
B)Bradley only
C)Both Irene and Bradley
D)Neither Irene nor Bradley
Q2) List, in order, the seven steps to create a knowledge management system.
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17
Chapter 17: Professionalism, Ethics, and Career Planning
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Q1) According to Bell, accountants should recognize the influence of:
A)The Sarbanes-Oxley Act of 2002.
B)Foreign currency exchange rates.
C)Both the Sarbanes-Oxley Act of 2002 and foreign currency exchange rates.
D)Neither the Sarbanes-Oxley Act of 2002 nor foreign currency exchange rates.
Q2) Which of the following steps in the Langenderfer and Rockness model comes first?
A)Identify the alternative courses of action.
B)Reach a decision as to the appropriate course of action.
C)Discuss the alternative with a trusted person.
D)Define the norms, principles and values related to the situation.
Q3) Debra and Dexter are CPAs specializing in tax planning and preparation.Recently, Debra stated that, in her view, her highest responsibility is to do what's right for herself.Which school of ethical thought does Debra follow?
A)ethical egoism
B)utilitarianism
C)deontology
D)virtue ethics
Q4) List the four characteristics suggested by McDonald to be considered a professional.
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Page 18
Chapter 18: Auditing and Evaluating the Ais
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Q1) The COSO enterprise risk management framework can be useful in:
A)Systems audits.
B)Investigative audits.
C)Both systems audits and investigative audits.
D)Neither systems audits nor investigative audits.
Q2) Generally accepted auditing standards are divided into three groups.In which group would you find "internal control?"
A)General
B)Field work
C)Reporting
D)None of these
Q3) An auditor is concerned that her company's purchasing process is not functioning as efficiently as possible.Which type of audit will best address her concern?
A)Financial
B)Operational
C)Management
D)Purchasing
Q4) In your own words, explain the ten generally accepted auditing standards discussed in the text.
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