Deck 7: Computer Controls for Organizations and Accounting Information Systems

Question 1

A Business Continuity Plan has numerous components, one of which is the Disaster Recovery Plan.

Answer 1

True

Question 2

Manual controls are often preferable to automated controls when human judgement and expertise are required.

Answer 2

True

Question 3

A hash total is obtained by counting all documents or records to be processed.

Answer 3

False

Question 4

According to the text, data transcription would only be necessary for a computerized accounting information system.

Question 5

No record of transactions is made in an online computerized system.

Question 6

A Disaster Recovery Plan is primarily operational in nature, and focuses on resumption of critical business processes in the event of a disaster.

Question 7

Biometric identifications are irrelevant to computer network systems.

Question 8

Input controls attempt to assure the accuracy and completeness of the data fed into the CPU for processing.

Question 9

It is more difficult to safeguard logical computer access than it is to safeguard physical computer access.

Question 10

Output controls for the computerized accounting information system focus primarily on the security and distribution of print media prepared by the computer center.

Question 11

Edit checks are very rarely used because they are not cost-effective controls.

Question 12

All controls available for the computerized accounting information system of a company should be implemented regardless of cost due to the high rate of computer crime.

Question 13

The audit trail is easier to follow in an online computerized system as compared to a batch system.

Question 14

Most computer vandalism is performed by "professional" computer criminals who have no personal contact with the computer centers they disrupt.

Question 15

The control of input and output of accounting transactions to and from the information processing subsystem should be performed by an independent control group.

Question 16

Testing processing programs with test data is performed only when a system is first installed due to the high costs of such test runs.

Question 17

The primary function of controls for a computerized accounting information system is to detect computer fraud.

Question 18

One of the techniques for controlling batch processing is the use of hash totals.

Question 19

Information processing personnel usually only use selective edit checks in data processing applications due to the cost of computer time necessary for editing.

Question 20

Automated controls are always preferable to manual controls.

Question 21

Which of the following is not a processing control?

A)Record counts
B)Control totals
C)Hash totals
D)Check digits

Question 22

Editing checks performed "in tandem" would be defined as:

A)Tests of alphanumeric field content
B)Tests for valid codes
C)Redundant data checks
D)Tests of reasonableness

Question 23

Logical access to the computer system would be best controlled by:

A)Intrusion alarm systems
B)Complex operating systems
C)Restrictions on physical access to online terminals
D)Password codes

Question 24

A limit check in a computer program is comparable to a decision that an individual makes in a manual system to judge a transaction's reasonableness.

Question 25

Because of the integrative nature of database systems, cost-effective controls on these systems are unimportant.

Question 26

We can classify IT-related controls based on function, implementation, and scope.

Question 27

Which of the following is not a major reason for controls in a computerized accounting information system?

A)More data are processed
B)Often, computerized data are unreadable to the human eye
C)With computerized data, there is a higher possibility of computer crime
D)all of the above are reasons for controls

Question 28

The principal function of an accounting system's computerized controls is:

A)Detecting computer frauds
B)Preventing computer frauds
C)Encouraging programmer honesty
D)none of the above

Question 29

A data field could pass all editing tests and still be invalid.Additional controls to cope with this would include:

A)Check digit
B)Unfound record test
C)Valid code test
D)both a and b could validate after editing tests

Question 30

When a company is setting up its accounting information system, it is important for management to select:

A)A standard set of computer control mechanisms
B)Only those controls which appear to serve its needs
C)Controls whose benefits exceed their costs
D)b and c only

Question 31

General controls within IT environments that affect personnel include:

A)Use of computer accounts
B)Separation of duties
C)Informal knowledge of employees
D)all of the above affect personnel

Question 32

General controls are those controls that affect the entire organization and influence the effectiveness of other controls.

Question 33

Which of the following is not a feedback mechanism for observation controls for data collection?

A)Confirmation slips
B)Turnaround documents
C)Dual observation
D)Direct, 2-way communication devices

Question 34

Which of the following is true about control totals?

A)Usually expressed in dollars
B)Batches normally occur in groups of 200 or more
C)Should "make sense" to be useful
D)none of the above

Question 35

A very effective ID approach for safeguarding logical computer access bases user recognition on:

A)IDA
B)Biometric identifications
C)Message acknowledgment procedures
D)Routing verification procedures

Question 36

Check digits have which of the following attributes?

A)Guarantees data validity
B)Detects fraudulent data
C)Always recommended for accounting information systems
D)none of the above

Question 37

A completeness test is an internal equipment control to test whether or not all transactions have been processed.

Question 38

Which of the following is not a subcategory of input controls?

A)Computer access
B)Data transcription
C)Data recording
D)Data processing

Question 39

Which of the following control mechanisms is common to both observation and recording control:

A)Confirmation slips
B)Dual observation
C)Preprinted forms
D)Turn around document

Question 40

MDM software allows an administrator to control and protect data located on mobile devices.

Question 41

Organizations that allow employees to use their own mobile devices for work purposes often require the installation of ___ software to mitigate the risk of enterprise information resources being compromised in the event of device theft or employee termination:

A)DDP
B)DLP
C)MDM
D)ETL

Question 42

Which of the following best describes a fundamental control weakness often associated with automated data processing systems?

A)Automated data processing equipment is more subject to systems error than manual processing is subject to human error
B)Automated data processing equipment processes and records similar transactions in a similar manner
C)Automated data processing procedures for detection of invalid and unusual transactions are less effective than manual control procedures
D)Functions that would normally be separated in a manual system are combined in an automated data processing system

Question 43

An expense report was prepared by a company's cost center.One executive questioned one of the amounts and asked for "the source documents which support the total." Data processing was not able to routinely do so.The best control procedure would be:

A)An error listing
B)An audit trail
C)Transmittal control
D)Documentation

Question 44

Which of the following types of errors will check digits usually detect?

A)Transposition of two digits
B)Inaccuracy of one digit
C)Double mistakes canceling out each other
D)Fraudulent data

Question 45

Daylight Corporation's organization chart provides for a controller and an information processing manager, both of whom report to the financial vice-president.Internal control would not be strengthened by:

A)Assigning the programming and operating of the computer to an independent control group which reports to the controller
B)Providing for maintenance of input data controls by an independent control group which reports to the controller
C)Rotating periodically among machine operators the assignments of individual application runs
D)Providing for review and distribution of computer output by an independent control group which reports to the controller

Question 46

The grandfather-parent-child approach to providing protection for important computer files is a concept that is most often found in:

A)Online, real-time systems
B)Manual systems
C)Magnetic tape systems
D)Magnetic disk systems

Question 47

We can classify IT controls based on implementation, function or scope.When considering IT controls based on scope, this classification includes:

A)Preventive, Detective, Corrective
B)Enterprise level, General and Application
C)Manual, Automated
D)Risk Assessment, Monitoring, Information & Communication

Question 48

Which of the following would lessen internal control in an automated data processing system?

A)The computer librarian maintains custody of computer program instructions and detailed listings
B)Computer operators have access to operator instructions and detailed program listings
C)The data control group is solely responsible for the distribution of all computer output
D)Computer programmers write and debug programs which perform routines designed by the systems analyst

Question 49

Principal output controls include all but one of the following:

A)Sequence tests of check stubs
B)Character control totals
C)Strict regulation of preprinted forms
D)all of the above

Question 50

An apparent error in input data describing an inventory item received was referred back to the originating department for correction.A week later the department complained that the inventory in question was incorrect.Data processing could not easily determine whether or not the item had been processed by the computer.The best control procedure would be:

A)Input edit checks
B)Missing data validity check
C)Transmittal control
D)An error log

Question 51

Which of the following is not normally used as a control total to check the validity of data processing activities?

A)Edit tests
B)Batch totals
C)Record counts
D)Hash totals

Question 52

Tape and disk output controls are primarily concerned with:

A)The storage space problem
B)Building control totals
C)Validating checksums
D)The encoding process

Question 53

Fault-tolerant systems are typically based on the concept of:

A)Redundancy
B)Consistency
C)Materiality
D)Fairness

Question 54

The least effective physical security control for a computer center is:

A)Limited employee access
B)Color-coded identification badges
C)Insurance
D)Strategic placement of computer center equipment

Question 55

A technique for controlling identification numbers (part number, employee number, etc.)is:

A)Self-checking (check)digits
B)Echo checks
C)Parity control
D)File protection

Question 56

From the standpoint of computer fraud, which type of controls would probably be of highest importance?

A)Input controls
B)Access controls
C)Output controls
D)Processing controls

Question 57

In its automated data processing system, a company might use selfchecking numbers (check digit)to enable detection of which of the following errors?

A)Assigning a valid identification code to the wrong customer
B)Recording an invalid customer's identification charge account number
C)Losing data between processing functions
D)Processing data arranged in the wrong sequence

Question 58

Control totals are used as a basic method for detecting data errors.Which of the following is not a control figure used as a control total in automated accounting systems?
E)Non-financial totals
F)Check-digit totals
G)Hash totals h)Financial totals

Question 59

Which of the following is an example of application controls in automated data processing systems?

A)Input controls
B)Hardware controls
C)Documentation procedures
D)Controls over access to equipment and data files

Question 60

Which of the following is not a control to ensure the physical safety of a company's data processing center?

A)Strategic placement of the computer center
B)The use of password codes
C)The use of identification badges
D)all of the above are computer facility controls

Question 61

Transactions which were erroneous and had been previously rejected by the computer system apparently were not being reentered and reprocessed once they had been corrected.This erroneous condition is best controlled by:

A)Comparing a record count of transactions input into the system
B)A comparison of the batch control totals
C)Scanning the error control log
D)Scanning the console log
E)Desk checking

Question 62

Which of the following policies or practices is most likely to represent a weakness in internal controls pertaining to an automated data processing system?

A)Computer operators are denied access to the system/program documentation library
B)Employees in the data processing department are prohibited from initiating requests for changes to master files
C)Computer programmers are permitted to operate the computer for regular processing runs which involve programs that they have written
D)Computer operators who run the programs related to inventory are prohibited from making test counts of goods on hand in order to check the accuracy of the computer inventory files
E)All corrections of errors in the master file are reviewed and approved by a supervisory-level employee who is independent of the data processing department

Question 63

In order to maintain good internal control within the computer department:

A)Computer operators need to be good programmers
B)Programmers should have control over day-to-day production runs
C)Computer operators should be allowed to make changes in programs as needed in order to keep the computer running
D)Programmers and computer operators should be in separate sections of the computer department
E)The tape librarian should be able to operate the computer

Question 64

A CPA reviews a client's payroll procedures.The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for:

A)Distributing payroll checks to employees
B)Reviewing and approving time reports for subordinate employees
C)Hiring subordinate employees
D)Initiating requests for salary adjustments for subordinate employees

Question 65

In designing a payroll system it is known that no individual's paycheck can amount to more than $300 for a single week.As a result, the payroll program has been written to bypass writing a check and printing out an error message if any payroll calculation results in more than $300.This type of control is called:

A)A limit or reasonableness test
B)Error review
C)Data validity test
D)Logic sequence test

Question 66

In preparing payroll checks, the computer omitted 24 of a total of 2,408 checks which should have been processed.The error was not detected until the supervisor distributed the checks.The best control procedure would be:

A)A parity check
B)A module N check
C)Control totals
D)Desk checking

Question 67

A company uses the account code 669 for maintenance expense.However, one of the company's clerks often codes maintenance expense as 996.The highest account code in the system is 750.What would be the best internal control check to build into the company's computer program to detect this error?

A)A check for this type of error would have to be made before the information was transmitted to the data processing center
B)Valid-character test
C)Sequence test
D)Valid-code test

Question 68

We can classify IT controls based on implementation, function or scope.When considering IT controls based on implementation, this classification includes:

A)Preventive, Detective, Corrective
B)Enterprise level, General and Application
C)Manual, Automated
D)Risk Assessment, Monitoring, Information & Communication

Question 69

When erroneous data are detected by computer program controls, such data may be excluded from processing and printed on an error report.The error report should most probably be reviewed and followed up by the:

A)Supervisor of computer operations
B)Systems analyst
C)Data control group
D)Computer programmer

Question 70

The master file for inventory did not seem right.The file was printed out and many errors were found.The best control procedure would be:

A)Trailer label control totals
B)A periodic test against physical count
C)A parity check
D)Limit tests

Question 71

Due to an unusual program error which had never happened before, the accounts receivable updating run did not process three transactions.The error was not noted by the operator because he was busy working on another project.There were control totals for the file which were printed out.An examination of the printout would have disclosed the error.The best control procedure would be:

A)An error message requiring operator response before processing continues
B)Reconciliation of control total by control clerk
C)Internal audit review of console log
D)Label checking by next computer program

Question 72

In an online, real-time system, which of the following would be most likely to be used as backup for an application's master file maintained on magnetic disk?

A)At specified periods the disk files would be dumped to (copied on)magnetic tape along with the period's transactions
B)A duplicate disk file would be maintained and all activity would be copied on magnetic tape continuously
C)The grandfather-parent-child technique would be employed to retain disk files
D)All source documents for transactions would be retained
E)The disk files would be copied to magnetic tape continuously

Question 73

It would be appropriate for the payroll accounting department to be responsible for which of the following functions?

A)Approval of employee time records
B)Maintenance of records of employment, discharges, and pay increases
C)Preparation of periodic governmental reports as to employees' earnings and withholding taxes
D)Distribution of paychecks to employees

Question 74

A transaction involving a charge to a non-existent customer account was entered into an accounts receivable and billing system that was batch processed.This error should be detected by the computer system and appear in:

A)The sort run error printout
B)The edit run error printout
C)The customer statements printout
D)The master file update run error printout
E)Some error printout other than those mentioned above

Question 75

For a routine management report produced on the computer, which one of the following control duties is most likely to be the sole responsibility of the user department?

A)Scanning the report for garbled output
B)Checking input totals against report totals
C)Determining that figures in the report are reasonable
D)Verifying record count totals
E)Checking the console listing for improper operator procedures

Question 76

We can classify IT controls based on implementation, function or scope.When considering IT controls based on function, this classification includes:

A)Preventive, Detective, Corrective
B)Enterprise level, General and Application
C)Manual, Automated
D)Risk Assessment, Monitoring, Information & Communication

Question 77

Jonkers, Inc., a large retail chain, is installing a computerized accounts receivable system employing a batch mode of processing with sequential files.The program which will process receipts on account should include an input edit routine to assure:

A)Proper sequencing of data
B)Header and trailer label accuracy
C)The amount received is recorded correctly
D)The existence of control totals
E)Proper operator intervention

Question 78

The master inventory file, contained on a removable magnetic disk, was destroyed by a small fire next to the area where it was stored.The company had to take a special complete inventory in order to re?establish the file.The best control procedure would be:

A)Fire insurance
B)Data processing insurance
C)A copy of the disk
D)Remote storage of a copy of the disk and the transactions since the disk was copied

Question 79

A weekly payroll check was issued to an hourly employee based on 98 hours worked instead of 38 hours.The time card was slightly illegible and the number looked somewhat like 98.The best control procedure would be:

A)A hash total
B)A code check
C)Desk checking
D)A limit test

Question 80

A sales transaction document was coded with an invalid customer account code (7 digits rather than 8).The error was not detected until the updating run when it was found that there was no such account to which the transaction could be posted.The best control procedure would be:

A)Parity checks
B)Keypunch verification
C)A hash total check
D)A check digit