IT Auditing
Chapter Exam Questions
Course Introduction
IT Auditing is a course designed to introduce students to the principles, practices, and frameworks associated with auditing information technology systems. The course covers essential topics such as risk assessment, audit planning, internal controls, compliance requirements, and data security within IT environments. Students will learn how to evaluate an organizations information systems to ensure integrity, confidentiality, and availability of data, as well as how to identify and respond to potential vulnerabilities. Through case studies and hands-on exercises, participants gain practical skills in performing IT audits, utilizing audit tools, and understanding regulatory standards such as COBIT, ISO, and ITIL.
Recommended Textbook
Accounting Information Systems 14th GLOBAL Edition by Marshall B. Romney
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Chapter 1: Conceptual Foundations of Accounting Information Systems
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Q1) The American Institute of Certified Public Accountants (AICPA)has recognized the importance of AIS and the major impact information technology has on the area of accounting.To recognize individual CPAs who have met educational and experiential requirements in this area,the group formally created the designation known as
A)the Certified Information Auditor.
B)the Certified Internal Auditor.
C)the Certified Information Technology Professional.
D)the Certified Data Processing Professional.
Answer: C
Q2) Define data,information,and how the value of information is determined.
Answer: Data: facts that are collected,entered,recorded,stored,and processed by an AIS.Information: data that has been organized and processed and is meaningful to its users.Such information is accessible,relevant,timely,reliable,verifiable,complete,and understandable.Information is of value when the benefits received from using or acting upon it outweigh the cost to produce the information.
Q3) An accounting information system requires at least one computer.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Overview of Transaction Processing and Enterprise Resource Planning Systems
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Q1) In Petaluma,California,electric power is provided to consumers by Pacific Power.Each month Pacific Power mails bills to 186,000 households and then processes payments as they are received.What is the best way for this business to ensure that payment data entry is efficient and accurate?
A)well-designed paper forms
B)source data automation
C)turnaround documents
D)sequentially numbered bills
Answer: C
Q2) Which of the following statements is not correct?
A)The audit trail is intended to verify the validity and accuracy of transaction recording.
B)The audit trail consists of records stored sequentially in an audit file.
C)The audit trail provides the means for locating and examining source documents.
D)The audit trail is created with document numbers and posting references.
Answer: B
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Chapter 3: Systems Documentation Techniques
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Q1) In a data flow diagram of the vendor payment process,"Vendor" will appear above or in
A)a square.
B)a circle.
C)two horizontal lines.
D)none of the above
Answer: A
Q2) Which symbol would be used in a flowchart to represent the addition of information about a step represented in another symbol on the flowchart?
A)#12
B)#13
C)#11
D)#15
Answer: C
Q3) Which symbol would be used in a flowchart to represent a manual process?
A)#5
B)#6
C)#10
D)#8
Answer: B
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Chapter 4: Relational Databases
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Q1) List the four DBMS "languages" and describe who uses each and for what purpose.
Q2) Creating an empty table in a relational database requires use of the ________,and populating that table requires the use of ________.
A)DDL; DML
B)DQL; SQL
C)DDL; DQL
D)DML; DDA
Q3) When the human resources manager wants to add a new employee to the sales department,the manager would use which language?
A)Data Manipulation Language
B)Data Query Language
C)Data Report Language
D)Data Definition Language
Q4) The document that shows the items stored in a file,including the order and length of the data fields and the type of data stored is called
A)a data layout.
B)a logical layout.
C)a physical layout.
D)a record layout.
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Chapter 5: Computer Fraud
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Q1) Lauren wants to open a floral shop in a downtown business district.She doesn't have funds enough to purchase inventory and pay six months' rent up front.Lauren approaches a good friend,Jamie,to discuss the possibility of Jamie investing funds and becoming a 25% partner in the business.After a lengthy discussion,Jamie agrees to invest.Eight months later,Jamie discovered that Lauren has not be honest with her regarding some aspects of the business financial operation.In order for Jamie to sue Lauren for fraud,all the following must be true except
A)Jamie's decision to invest was primarily based on Lauren's assertion that she had prior floral retail experience.
B)Jamie has suffered a substantial loss in her investment because of Lauren's deception. C)Jamie trusted and relied on Lauren's representation of the business financial operation.
D)Jamie found Lauren dishonest because she does not always reconcile the business cash account on a timely basis.
Q2) What are the actions recommended by the Treadway Commission to reduce the possibility of fraudulent financial reporting?
Q3) Explain the impact of SAS No.99 on auditors' responsibilities.
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Chapter 6: Computer Fraud and Abuse Techniques
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Q1) Ashley Baker works in the information technology department of Core Company.On Monday morning,she arrived at work,scanned her identity card,and entered her access code.At that moment,a man in a delivery uniform came up behind Ashley with a bunch of boxes.Although Ashley held the door for the delivery man,she later wondered if the man was engaged in
A)pretexting.
B)piggybacking.
C)posing.
D)spoofing.
Q2) Carding is
A)verifying credit card validity; buying and selling stolen credit cards.
B)inserting a sleeve into an ATM so that it will not eject the victim's card, pretending to help the victim as a means of obtaining his PIN, and using the card and PIN to drain the account.
C)a technique that tricks a person into disclosing confidential information.
D)changing data before, during, or after it is entered into the system in order to delete, alter, or add key system data.
Q3) How can a system be protected from viruses?
Q4) Describe the differences between spyware,scareware,and ransomware.
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Chapter 7: Control and Accounting Information Systems
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Q1) Best Friends,Incorporated is a publicly traded company where three BFF's (best friends forever)serve as its key officers.This situation
A)violates the Sarbanes-Oxley Act.
B)violates the Securities and Exchange Act.
C)increases the risk associated with an audit.
D)All of the above.
Q2) According to the ERM model,________ help to deal with the effectiveness and efficiency of company operations,such as performance and profitability goals.
A)compliance objectives
B)operations objectives
C)reporting objectives
D)strategic objectives
Q3) Explain why management's philosophy and operating style are considered to be the most important element of the internal environment.
Q4) The COSO ERM contains all five of the same COSO-Integrated Framework components.
A)True
B)False
Q5) Explain why the Foreign Corrupt Practices Act was important to accountants.
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Chapter 8: Controls for Information Security
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Q1) The most common input-related vulnerability is called the A)softening attack.
B)hardening attack.
C)cross-site scripting attack.
D)buffering attack.
Q2) Identify one aspect of systems reliability that is not a source of concern with regards to a public cloud.
A)confidentiality
B)privacy
C)efficiency
D)availability
Q3) ________ is/are an example of a preventive control.
A)Emergency response teams
B)Encryption
C)Log analysis
D)Intrusion detection
Q4) Describe the basic steps criminal use to attack an organization's information system.Select one of the steps and find a news story that relates to the step that you have chosen.
Q5) Identify six physical access controls.
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Chapter 9: Confidentiality and Privacy Controls
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Q1) If an organization asks you to disclose your date of birth and your address,but fails to establish any procedures for responding to customer complaints,the organization has likely violated which of the Generally Accepted Privacy Principles?
A)Collection.
B)Access.
C)Security.
D)Monitoring and enforcement.
Q2) The first steps in protecting the privacy of personal information is to identify A)what sensitive information is possessed by the organization.
B)where sensitive information is stored.
C)who has access to sensitive information.
D)All of the above are first steps in protecting privacy.
Q3) The system and processes used to issue and manage asymmetric keys and digital certificates are known as
A)asymmetric encryption.
B)certificate authority.
C)digital signature.
D)public key infrastructure.
Q4) Discuss the most important control for protecting confidentiality.
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Chapter 10: Processing Integrity and Availability Controls
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Q1) Which of the following statements is true with regards to system availability?
A)Human error does not threaten system availability.
B)Threats to system availability can be completely eliminated.
C)Proper controls can maximize the risk of threats causing significant system downtime.
D)Threats to system availability include hardware and software failures as well as natural and man-made disasters.
Q2) The batch processing data entry control that sums a field that contains dollar values is called
A)record count.
B)financial total.
C)hash total.
D)sequence check.
Q3) Which of the following is an important control to prevent buffet overflow vulnerabilities?
A)Limit check.
B)Size check.
C)Range check.
D)Field check.
Q4) Discuss ways that can help ensure the processing integrity of electronic voting.
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Chapter 11: Auditing Computer-Based Information Systems
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Q1) Which of the following is not one of the types of internal audits?
A)A review of the corporate organizational structure and reporting hierarchies.
B)An examination of procedures for reporting and disposing of hazardous waste.
C)A review of source documents and general ledger accounts to determine integrity of recorded transactions.
D)A comparison of estimates and analysis made before purchase of a major capital asset to actual numbers and results achieved.
Q2) Inserting a dummy entity in a company's system; processing test transactions to update that will not affect actual records is an example of
A)integrated test facility.
B)snapshot technique.
C)system control audit review file.
D)audit hooks.
Q3) Increasing the effectiveness of auditing software will
A)reduce detection risk.
B)reduce control risk.
C)increase detection risk.
D)increase control risk.
Q4) Describe the risk-based audit approach.
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Chapter 12: The Revenue Cycle: Sales to Cash Collections
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Q1) The document a customer returns with their payment and that identifies the source and the amount of the payment is called a
A)remittance advice.
B)remittance list.
C)credit memorandum.
D)debit memorandum.
Q2) Regularly reviewing an accounts receivable aging report can help management do what?
A)spot firms who are falling behind in their payments
B)identify customers who have not purchased anything lately
C)improve the speed which customers make payments
D)determine whether the firm's pricing policy is effective
Q3) A(n)________ system prepares and mails monthly statements to customers throughout the entire month,instead of just at the end of the month.
A)continuous
B)open-invoice
C)cycle billing
D)balance forward
Q4) Define and describe benefits of a CRM system.
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Chapter 13: The Expenditure Cycle: Purchasing to Cash Disbursements
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Q1) The EOQ approach to managing inventory has been gaining popularity in recent years.
A)True
B)False
Q2) There is a symmetrical interdependence between a firm's expenditure cycle and its suppliers'
A)production cycle.
B)revenue cycle.
C)expenditure cycle.
D)general ledger and reporting system.
Q3) Restricting access to the approved supplier list can
A)help reduce the risk of fraudulent disbursements.
B)cause purchase order approval delays.
C)eliminate the risk of duplicate payment.
D)improve the efficiency of the expenditure cycle.
Q4) Discuss the differences between EOQ,MRP,and JIT.
Q5) Under what conditions is MRP more suitable than JIT and vice versa?
Q7) Define and describe the EOQ approach to inventory management. Page 15
Q6) In a supplier audit,what are some of the red flags that could indicate potential supplier's problems?
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Chapter 14: The Production Cycle
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Q1) ________ is an efficient way to track and process information about raw materials used in production.
A)A just-in-time inventory system
B)Identifying materials with bar codes or RFID tags
C)A materials resources planning inventory system
D)Job-order costing
Q2) Which process or activity relates to overproduction?
A)product design
B)planning and scheduling
C)production operations
D)cost accounting
Q3) Discuss the three categories of overhead costs in an activity-based costing system.
Q4) Maintaining physical custody of the raw materials and finished goods inventories is the responsibility of the accounting department.
A)True
B)False
Q5) Discuss the criticisms of traditional cost accounting methods.
Q6) What role does the AIS play in the production cycle?
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Chapter 15: The Human Resources Management and Payroll Cycle
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Q1) A payroll clearing account is used to
A)check the accuracy of payroll costs.
B)speed up payroll transaction processing.
C)reduce the transaction costs associated with payroll transaction processing.
D)eliminate the need to manually record payroll transactions.
Q2) Experts estimate that,on average,the costs associated with replacing an employee are about ________ the employee's annual salary.
A)0.5 time
B)1 time
C)1.5 times
D)2 times
Q3) The employer pays a portion of some payroll taxes and employee benefits.Both the employee and employer pay which benefit or tax listed below?
A)Social security taxes.
B)Federal income taxes.
C)State income taxes.
D)Municipal taxes.
Q4) Explain the functions of the payroll register,deduction register,and earnings statement.
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Chapter 16: General Ledger and Reporting System
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Q1) Adjusting entries that are made to reflect differences between the actual and recorded value of an asset or a change in accounting principle are called
A)reconciliations.
B)revaluations.
C)estimates.
D)accruals.
Q2) A listing of journal vouchers by numerical sequence,account number,or date is an example of
A)a general ledger control report.
B)a budget report.
C)a batch to be processed.
D)responsibility accounting.
Q3) The ________ is the managerial report that shows planned cash inflows and outflows for major investments or acquisitions.
A)journal voucher list
B)statement of cash flows
C)operating budget
D)capital expenditures budget
Q4) Explain the purpose of a journal voucher file.
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Chapter 17: Database Design Using the Rea Data Model
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Q1) Explain how an AIS system can be viewed as a set of "give-to-get" exchanges.
Q2) Every citizen in the United States has one social security number,but no two citizens have the same social security number.Thus,the cardinality that exists between social security numbers and citizens is
A)one-to-one.
B)one-to-many.
C)many-to-many.
D)many-to-none.
Q3) What is Cardinalities?
Q4) The choice of cardinalities is often arbitrary to reflect facts about the organization being modeled and its business practices.
A)True
B)False
Q5) An entity-relationship diagram
A)can represent the contents of any database.
B)is only used in conjunction with REA models.
C)can show a limited number of entities and relationships.
D)is used only to design new databases.
Q6) Describe the possible relationships between entities,in terms of cardinalities.
Page 20
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Chapter 18: Implementing an Rea Model in a Relational Database
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Q1) Helge Autoparts sells new and refurbished auto parts exclusively to auto dealers.Helge purchases inventory from distributors at trade conventions.Each time Helge makes a purchase,the company records the suppliers name,address,date,specific items purchased,price paid for each,and the total amount spent.Helge later researches the inventory items to set the customer price.The company assigns an inventory number to each item purchased and records the customer price for each item.Helge buys price tags and display supplies from Alwin Incorporated,a company that sells them at all trade conventions.All inventory and supplies purchases are immediately paid for with cash or with checks from a bank account in Helge's name.All cash received from sales are also deposited to the same bank account.Several times a year Helge rents display space at dealer conventions.A deposit is always required,and the entire fee is due the day the convention starts.Helge records the deposit and final payment,along with the convention's name and address,in the same worksheet on which purchases of inventory and supplies are recorded. Which of the following would not be an attribute in the Inventory table?
A)Total amount of purchase.
B)Price paid for inventory.
C)Asking price.
D)Inventory number.
Q2) Explain a completeness check.
21
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Chapter 19: Special Topics in Rea Modeling
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Q1) In which entity would an item's actual cost information most likely be maintained?
A)Inventory entity.
B)Order_Inventory entity.
C)Inventory-Order_Inventory entity.
D)Cost entity.
Q2) Using an REA database design,which of the below is false with regards to cost data?
A)Cost information is stored in several tables.
B)Standard cost is stored as an attribute of the Inventory table because it is the same for all units of a given inventory item for a fiscal year.
C)In contrast, the actual cost of inventory is stored in a relationship table because prices can vary over time.
D)Actual cost can be stored as an attribute of the Inventory table for organizations that value inventory based on the most recent amount paid.
Q3) Why is the event Issue Debt often modeled as a separate event entity?
Q4) Describe the four main events of interest included in a typical production cycle REA diagram.
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Chapter 20: Introduction to Systems Development and Systems Analysis
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Q1) When seeking to verify how a system actually works,rather than how it should work.The most useful approach is to
A)conduct interviews.
B)make observations.
C)distribute questionnaires.
D)read system documentation.
Q2) When seeking to find answers to questions pertaining to "why," the most useful approach is to
A)conduct interviews.
B)make observations.
C)distribute questionnaires.
D)read system documentation.
Q3) Suppose an organization is interested in knowing whether the system can be developed and implemented using existing technology.Where should this requirement be considered in a feasibility study?
A)Economic feasibility.
B)Scheduling feasibility.
C)Operational feasibility.
D)Technical feasibility.
Q4) Describe the five phases of systems analysis.
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Chapter 21: Ais Development Strategies
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Q1) Which statement is true regarding canned software and the systems development life cycle (SDLC)?
A)Canned software cannot be modified to meet unique user needs.
B)Companies that buy, rather than develop, AIS software can still follow the systems development life cycle (SDLC)process.
C)Most canned software meets all of a company's information or data processing needs.
D)The systems development life cycle (SDLC)process does not apply to purchasing canned software.
Q2) End-user computing can eliminate many of the analyst-programmer communication problems associated with the traditional program development.
A)True
B)False
Q3) What guidelines should be followed when contracting with an outside developer to create custom software?
Q4) Describe the important characteristics of extreme programming (XP).
Q5) Describe the conditions that favor the use of prototyping.
Q6) Explain the concept of an application service provider.
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Chapter 22: Systems Design, implementation, and Operation
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Q1) Which of the following control considerations will help ensure that all input,processing,storage,and output activities are authorized by the appropriate managers?
A)Security.
B)Accuracy.
C)Authorization.
D)Validity.
Q2) Describe the approaches to system conversion.
Q3) One of the purposes of the ________ is to guide physical systems design activities.
A)conceptual systems design report
B)physical systems design report
C)program design
D)systems analysis report
Q4) What factors does a steering committee consider when evaluating different system designs?
Q5) Describe the conceptual design specifications once a design alternative is selected.
Q6) What are the purposes of a conceptual systems design report?
Q7) What is systems implementation? How do you plan for it?
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