Question 1

Section 404 of the Sarbanes-Oxley Act requires that monthly filings of publicly traded companies include a statement of management's responsibility for establishing and maintaining adequate internal control as well as an assessment of the effectiveness of that internal control.

Accepted Answer

Section 404 of the Sarbanes-Oxley Act requires an annual (not monthly) assessment of internal controls and procedures for financial reporting and a statement of management's responsibility for establishing and maintaining these controls.

Question 2

The interim audit requires some type of substantive testing.

Accepted Answer

False

Question 3

The usual focus of an audit is to review an existing system rather than design a new system.

Accepted Answer

An audit is typically conducted to evaluate and examine an existing system and provide recommendations for improvement, rather than to design a new system from scratch.

Question 4

Auditors primarily use IPO and HIPO charts.

Accepted Answer

IPO (Input-Process-Output) and HIPO (Hierarchy Input-Process-Output) charts are primarily used by system analysts and developers in the design phase of information systems, not by auditors. Auditors typically use audit planning and control tools and techniques such as risk assessment, analytical procedures, and sampling methods.

Question 5

Auditors undertake compliance testing to determine the degree of reliance of existing internal controls.

Accepted Answer

Compliance testing is a process by which auditors assess the effectiveness of existing internal controls and identify any areas of non-compliance with relevant laws or regulations. This enables them to determine the degree of reliance that can be placed on the controls, and to identify any weaknesses or gaps that need to be addressed in order to improve compliance and reduce risk.

Question 6

In the United States,the AICPA is responsible for establishing standard flowchart symbols.

Accepted Answer

While the AICPA is responsible for establishing auditing standards and professional ethics for certified public accountants, they are not responsible for establishing standard flowchart symbols. This task falls under the purview of organizations such as the International Organization for Standardization (ISO) and the American National Standards Institute (ANSI).

Question 7

The decision symbol represents a named procedure consisting of one or more operations or program steps that are not specified within the set of flowcharts.

Accepted Answer

The decision symbol represents a decision point in the process flow where a question or condition is asked, and the answer or result determines the next step. It does not represent a named procedure or a set of operations or program steps.

Question 8

If no special symbol exists to depict a function,verbal descriptions are used in the flowchart.

Accepted Answer

Verbal descriptions may be used in pseudocode or written algorithm, but flowcharts have specific symbols for depicting functions.

Question 9

Section 404 of the Sarbanes-Oxley Act requires that annual filings of publicly traded companies include a statement of management's responsibility for establishing and maintaining adequate internal control as well as an assessment of the effectiveness of that internal control.

Accepted Answer

Section 404 of the Sarbanes-Oxley Act indeed requires annual filings of publicly traded companies to include a statement of management's responsibility for establishing and maintaining adequate internal control, along with an assessment of the effectiveness of that internal control.

Question 10

The decision symbol represents a decision or switching type of operation that determines which of a number of alternative paths is to be followed.

Accepted Answer

The statement is true, the decision symbol is used to represent a decision that determines which path to follow.

Question 11

It is desirable for auditors to have a basic understanding of systems techniques.

Accepted Answer

Auditors need to have enough knowledge of systems techniques to understand how the company's internal controls work and how they can be improved. This knowledge assists them in assessing risk and designing effective audit procedures.

Question 12

Systems analysis involves formulating a blueprint for a completed system.

Accepted Answer

Systems analysis involves understanding and specifying what a system should do, while formulating a blueprint for a completed system is part of systems design.

Question 13

Substantive testing involves direct verification of financial statement figures.

Accepted Answer

Substantive testing involves testing the accuracy, completeness, and validity of financial statement figures through direct verification. This can be done through methods such as physical inspection, third-party confirmations, and analytical procedures.

Question 14

The four basic symbols corresponding to basic data processing functions are the input/output symbol,the process symbol,the flowline symbol,and the annotation or comment symbol.

Accepted Answer

This is true. The input/output symbol represents data being entered into or outputted from the system, the process symbol represents the action being taken on the data, the flowline symbol represents the movement of the data between symbols, and annotation or comment symbols are used to provide additional information or explanation about the process.

Question 15

Systems techniques assist the analyst in the collection and organization of facts.

Accepted Answer

Systems techniques, such as data flow diagrams and entity-relationship diagrams, help in the analysis of a problem by collecting and organizing facts about the system or process being studied.

Question 16

Tools used in the analysis,design,and documentation of system and subsystem relationships are known as system techniques.

Accepted Answer

System techniques refer to the various tools and methods used in analyzing, designing, and documenting the relationships between different subsystems of a system.

Question 17

Analytic and system flowcharts are seldom found in the working papers of auditors.

Accepted Answer

Analytic and system flowcharts are commonly used in the working papers of auditors to understand and document the client's processes and systems, which is crucial for planning and performing an audit effectively.

Question 18

When evaluating internal controls,auditors are usually not concerned with the flow of processing and distribution of documents within an application system.

Accepted Answer

Auditors are concerned with the flow of processing and distribution of documents within an application system as this can indicate potential weaknesses or inefficiencies in the internal control system. Understanding how documents are processed and distributed can help auditors identify areas of risk and make recommendations for improvements.

Question 19

Manual input/output and connector symbols are among the basic flowchart symbols.

Accepted Answer

The answer of Manual input/output and connector symbols are among...

Question 20

A systems development project generally consists of three main phases.

Accepted Answer

The three main phases in a systems development project are typically planning, analysis/design, and implementation/operation.

Quiz 2: Systems Techniques and Documentation