IT Auditing
Final Test Solutions
Course Introduction
IT Auditing is a course that introduces students to the principles, methodologies, and practices of auditing information technology systems within organizations. The course covers key topics such as risk assessment, internal controls, compliance requirements, evidence collection, and evaluation of IT infrastructure to ensure data integrity, confidentiality, and availability. Students learn about various audit frameworks, standards (such as COBIT, ISO 27001), and legal considerations relevant to IT audits, while developing practical skills in the planning and execution of IT audits, reporting findings, and recommending improvements to align IT processes with organizational objectives.
Recommended Textbook
Accounting Information Systems 10th Edition by James A. Hall
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16 Chapters
1672 Verified Questions
1672 Flashcards
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Chapter 1: The Information System: an Accountants Perspective
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) A potential benefit of cloud computing is that the client firm does not need to know where its data are being processed.
A)True
B)False
Answer: False
Q2) Custom software is developed and maintained by enterprise resource planners.
A)True
B)False
Answer: False
Q3) Sarbanes-Oxley legislation requires that management designs and implements controls over the entire financial reporting process.What systems does this include? Answer: This includes the financial reporting system,the general ledger system,and the transaction processing systems that supply the data for financial reporting.
Q4) Information technology (IT)audits can be performed by both internal and external auditors.
A)True
B)False
Answer: True
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Chapter 2: Introduction to Transaction Processing
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) The most important advantage of sequential coding is that
A)missing or unrecorded documents can be identified
B)the code itself lacks informational content
C)items cannot be inserted
D)deletions affect the sequence
Answer: A
Q2) Sequential storage means
A)data is stored on tape
B)access is achieved through an index
C)access is direct
D)reading record 100 requires first reading records 1 to 99
Answer: D
Q3) In a computerized environment,a list of authorized suppliers would be found in the A)master file
B)transaction file
C)reference file
D)archive file
Answer: C
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4
Chapter 3: Ethics,fraud,and Internal Control
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) A shell company fraud involves
A)stealing cash from an organization before it is recorded
B)stealing cash from an organization after it has been recorded
C)manufacturing false purchase orders, receiving reports, and invoices
D)paying a vendor twice for the same products and cashing the reimbursement check issued by the vendor
Answer: C
Q2) Segregation of duties is an example of an internal control procedure.
A)True
B)False
Answer: True
Q3) When duties cannot be segregated,the most important internal control procedure is
A)supervision
B)independent verification
C)access controls
D)accounting records
Answer: A
Q4) What are the three categories of processing control?
Answer: Batch controls,run-to-run controls,and audit trail controls
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Chapter 4: The Revenue Cycle
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118 Flashcards
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Sample Questions
Q1) Physical controls are embedded in computer systems to control access to data.
A)True
B)False
Q2) Internal controls for handling sales returns and allowances do not include
A)computing bad debt expense using the percentage of credit sales
B)verifying that the goods have been returned
C)authorizing the credit memo by management
D)using the original sales invoice to prepare the sales returns slip
Q3) Describe the key tasks in the sales order process.
Q4) An advantage of real-time processing of sales is
A)the cash cycle is lengthened
B)current inventory information is available
C)hardcopy documents provide a permanent record of the transaction
D)data entry errors are corrected at the end of each batch
Q5) Multilevel security employs programmed techniques that permit simultaneous access to a central system by many users with different access privileges but allows them to obtain information for which they lack authorization.
A)True
B)False
Q6) What is the role of the shipping notice?
Page 6
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Chapter 5: The Expenditure Cycle Part I: Purchases and Cash
Disbursements Procedures
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) The major risk exposures associated with the receiving department include all of the following except
A)goods are accepted without a physical count
B)there is no inspection for goods damaged in shipment
C)inventories are not secured on the receiving dock
D)the audit trail is destroyed
Q2) A three-way match involves a purchase order,a purchase requisition,and an invoice.
A)True
B)False
Q3) If accounts payable receives an invoice directly from the supplier,it needs to be reconciled with the purchase order and receiving report.
A)True
B)False
Q4) Discuss three specific physical controls to mitigate the risk of inaccurate record keeping.
Q5) What is the purpose of the supplier's invoice?
Q6) Describe four tasks the purchases computer application performs automatically in the integrated purchases processing system.
Page 7
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Chapter 6: The Expenditure Cycle Part II: Payroll Processing and
Fixed Asset Procedures
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Sample Questions
Q1) Why should the employee's supervisor not distribute paychecks?
Q2) Explain the integration of payroll with the human resource management (HRM)system that often happens in moderate- and large-sized organizations.
Q3) An important reconciliation in the payroll system is
A)general ledger compares the labor distribution summary from cost accounting to the disbursement voucher from accounts payable
B)personnel compare the number of employees authorized to receive a paycheck to the number of paychecks prepared
C)production compares the number of hours reported on job tickets to the number of hours reported on time cards
D)payroll compares the labor distribution summary to the hours reported on time cards
Q4) Fixed asset systems must keep track of the physical location of each asset to promote accountability.
A)True
B)False
Q5) How are the following carried out in the fixed asset system: authorization,supervision,independent verification?
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Chapter 7: The Conversion Cycle
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102 Flashcards
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Sample Questions
Q1) Discuss three common problems associated with inventories.
Q2) An example of a continuous process is the production of A)wedding invitations
B)milk products
C)jet aircraft
D)all of the above
Q3) An example of automation of manufacturing planning is
A)computer-aided engineering
B)automated storage and retrieval systems
C)materials requirements planning
D)computer numerical control
Q4) The production schedule is
A)the expected demand for the firm's finished goods for a given year
B)the formal plan and authority to begin production
C)a description of the type and quantity of raw materials and subassemblies used to produce a single unit of finished product
D)the sequence of operations during manufacturing
Q5) How do lean manufacturing companies use electronic data interchange (EDI)?
Q6) What is the difference between a materials requisition and a purchase requisition?
Page 9
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Chapter 8: Financial Reporting,and Management Reporting Systems
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100 Flashcards
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Sample Questions
Q1) Using ROI as a performance measure is most appropriate for the manager of a A)profit center
B)cost center
C)investment center
D)merchandise control center
Q2) Contrast the four decision types: strategic planning,tactical planning,management control and operational control,by the five decision characteristics: time frame,scope,level of details,recurrence,and certainty.
Q3) An XBRL taxonomy
A)is the document format used to produce web pages
B)is the final product (report)
C)is a classification scheme
D)is a tag stored in each database record
Q4) Many financial reports produced by organizations are nondiscretionary-publicly traded firms have no choice but to prepare income statements,tax returns,etc.Management reporting is often called discretionary reporting because it is not mandated,as is financial reporting.Is this a valid statement? Why or why not?
Q5) Discuss three control implications of XBRL
Q6) What is information overload? How does it affect decision-making?
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Chapter 9: Database Management Systems
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) The task of searching the database to locate a stored record for processing is called
A)data deletion
B)data storage
C)data attribution
D)data retrieval
Q2) What is the normal cardinality between a Customer entity and a Sales order entity? What does it signify? Why is it the only logical cardinality?
Q3) How is a database deadlock usually resolved? What are factors that influence the decision made regarding the transactions?
Q4) Discuss the accountant's role in data modeling and potential problems caused by anomalies.
Q5) Which procedure will prevent two end users from accessing the same data element at the same time?
A)data redundancy
B)data replication
C)data lockout
D)none of the above
Q6) Explain the purpose of an ER diagram in database design.
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Chapter 10: The Rea Approach to Business Process
Modeling
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75 Verified Questions
75 Flashcards
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Sample Questions
Q1) Value chain analysis distinguishes between primary activities and support activities.
A)True
B)False
Q2) When developing an REA model:
A)accounting artifacts are represented as support events
B)the same resource is both increased and decreased by the duality association
C)link tables are explicitly depicted
D)events are organized in sequence of occurrence
Q3) Describe the two economic events that occur for payroll procedures.
Q4) List and explain the steps involved in preparing an REA model of a business process.
Q5) Modern managers need both financial and nonfinancial information that traditional GAAP-based accounting systems are incapable of providing.
A)True
B)False
Q6) Discuss how adopting a value chain perspective reveals advantages of adopting an REA approach to information system development.
Q7) Define duality.
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Chapter 11: Enterprise Resource Planning Systems
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95 Flashcards
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Sample Questions
Q1) Which statement is least accurate?
A)Implementing an ERP system has as much to do with changing the way an organization does business as it does with technology.
B)The big bang approach to ERP implementation is generally riskier than the phased-in approach.
C)To take full advantage of the ERP process, reengineering will need to occur.
D)A common reason for ERP failure is that the ERP does not support one or more important business processes of the organization.
Q2) The primary goal of installing an ERP system is achieving business process reengineering to improve customer service,reduce production time,increase productivity,and improve decision-making.
A)True
B)False
Q3) Briefly explain the two general approaches to contingency planning for ERPs.
Q4) RBAC assigns access permissions to the role an individual plays in the organization rather than directly to the individual.
A)True
B)False
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Page 13
Chapter 12: Electronic Commerce Systems
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109 Flashcards
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Sample Questions
Q1) The primary difference between a LAN and a WAN is
A)the geographical area covered by the network
B)the transmission technology used
C)the type of workstation used
D)the size of the company
Q2) What is packet switching?
Q3) Explain a SYN flood attack.
Q4) A distributed denial of service (DDoS)attack
A)is more intensive that a DoS attack because it emanates from single source
B)may take the form of either a SYN flood or smurf attack
C)is so named because it effects many victims simultaneously, which are distributed across the Internet
D)turns the target victims' computers into zombies that are unable to access the Internet
Q5) Define and contrast digital certificate and digital signature.
Q6) Name the three parties involved in a smurf attack.
Q7) A smurf attack involves three participants: a zombie,an intermediary,and the victim.
A)True
B)False
Page 14
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Chapter 13: Managing the Systems Development Life Cycle
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Sample Questions
Q1) Describe the cold turkey (or big bang)approach to system cutover.
Q2) What is meant by object-oriented design? What does it mean for systems design?
Q3) The systems steering committee is responsible for all of the following except
A)assigning priorities
B)determining whether and when to terminate systems projects
C)analyzing the technical feasibility of the project
D)budgeting funds for systems development
Q4) Name three topics that would not be included in the systems analysis report.
Q5) A primary role for accountants during the detailed design and implementation phases is to ensure that controls are adequate to meet the requirements of Statement on Auditing Standards No.109.
A)True
B)False
Q6) All vendor-supported systems include software,infrastructure,and maintenance.
A)True
B)False
Q7) List three advantages and one disadvantage of commercial software.
Q8) What is the purpose of a system design walkthrough and who conducts it?
Q9) What is the payback method and how is it used?
Q10) List four types of facts that should be gathered during an analysis of a system. Page 15
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Page 16
Chapter 14: Auditing It Controls Part I: Sarbanes-Oxley and It Governance
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Explain why certain duties that are deemed incompatible in a manual system may be combined in an automated environment? Give an example.
Q2) A qualified opinion on management's assessment of internal controls over the financial reporting system necessitates a qualified opinion on the financial statements.
A)True
B)False
Q3) The PCAOB's Auditing Standard No.5 specifically requires auditors to understand transaction flows in designing their test of controls.What steps does this entail?
Q4) Describe how a corporate IT function can overcome some of the problems associated with distributed data processing.
Q5) Which statement is not correct?
A)Auditors gather evidence using tests of controls and substantive tests.
B)The most important element in determining the level of materiality is the mathematical formula.
C)Auditors express an opinion in their audit report.
D)Auditors compare evidence to established criteria.
Q6) What is a disaster recovery plan? What are the key features?
Page 17
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Chapter 15: Auditing It Controls Part II: Security and Access
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Sample Questions
Q1) What is a user-defined procedure?
Q2) Computer viruses usually spread throughout the system before being detected. A)True
B)False
Q3) Subschemas are used to authorize user access privileges to specific data elements.
A)True
B)False
Q4) Viruses rarely attach themselves to executable files.
A)True
B)False
Q5) Firewalls are special materials used to insulate computer facilities.
A)True
B)False
Q6) Network communication poses some special types of risk for a business.What are the two broad areas of concern? Explain.
Q7) The most frequent victims of program viruses are microcomputers. A)True
B)False
Page 18
Q8) Explain how the one-time password approach works.
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Chapter 16: Auditing It Controls Part III: Systems
Development, program Changes, and Application Auditing
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Sample Questions
Q1) Programs in their compiled state are highly susceptible to the threat of unauthorized modification.
A)True
B)False
Q2) What are CAATS? Identify five of them.
Q3) Source program library controls should prevent and detect unauthorized access to application programs.
A)True
B)False
Q4) To support future audit needs,test data prepared during systems implementation should be preserved.
A)True
B)False
Q5) Outline the six controllable activities that relate to new systems development
Q6) Describe a test of controls that would provide evidence that only authorized program maintenance is occurring.
Q7) What is ITF?
Q8) What is meant by auditing around the computer versus auditing through the computer? Why is this so important? Page 19
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Page 20