Deck 2: Auditing IT Governance Controls

Question 1

Commodity IT assets easily acquired in the marketplace and should be outsourced under the core competency theory.

Answer 1

False

Question 2

Some systems professionals have unrestricted access to the organization's programs and data.

Answer 2

True

Question 3

Distributed data processing places the control IT recourses under end users.

Answer 3

True

Question 4

An advantage of distributed data processing is that redundant tasks are greatly eliminated

Question 5

Transaction cost economics (TCE)theory suggests that firms should outsource specific non-core IT assets

Question 6

To improve control and efficiency,the CBIS tasks of new systems development and program maintenance should be performed by the same individual or group.

Question 7

An often-cited benefit of IT outsourcing is improved core business performance.

Question 8

A disaster recovery plan is a comprehensive statement of all actions to be taken after a disaster.

Question 9

Specific IT assets support an organization's strategic objectives.

Question 10

A ROC usually involves two or more user organizations that buy or lease a building and remodel it into a computer site,but without the computer and peripheral equipment.

Question 11

Commodity IT assets include such things are network management.

Question 12

Certain duties that are deemed incompatible in a manual system may be combined in a computer-based information system environment.

Question 13

In a CBIS environment,data consolidation protects corporate data from computer fraud and losses from disaster.

Question 14

To fulfill the segregation of duties control objective,computer processing functions (like authorization of credit and billing)are separated.

Question 15

A generally accepted advantage of IT outsourcing is improved security.

Question 16

The database administrator should be separated from systems development.

Question 17

To ensure sound internal control,program coding and program processing should be separated.

Question 18

RAID is the use of parallel disks that contain redundant elements of data and applications.

Question 19

A database administrator is responsible for the receipt,storage,retrieval,and custody of data files.

Question 20

Fault tolerance is the ability of the system to continue operation when part of the system fails due to hardware failure,application program error,or operator error.

Question 21

Systems development is separated from data processing activities because failure to do so

A) weakens database access security
B) allows programmers access to make unauthorized changes to applications during execution
C) results in inadequate documentation
D) results in master files being inadvertently erased

Question 22

Supervision in a computerized environment is more complex than in a manual environment for all of the following reasons except

A) rapid turnover of systems professionals complicates management's task of assessing the competence and honesty of prospective employees
B) many systems professionals have direct and unrestricted access to the organization's programs and data
C) rapid changes in technology make staffing the systems environment challenging
D) systems professionals and their supervisors work at the same physical location

Question 23

In a computer-based information system,which of the following duties needs to be separated?

A) program coding from program operations
B) program operations from program maintenance
C) program maintenance from program coding
D) all of the above duties should be separated

Question 24

Which organizational structure is most likely to result in good documentation procedures?

A) separate systems development from systems maintenance
B) separate systems analysis from application programming
C) separate systems development from data processing
D) separate database administrator from data processing

Question 25

Which of the following is not an essential feature of a disaster recovery plan?

A) off-site storage of backups
B) computer services function
C) second site backup
D) critical applications identified

Question 26

Which is the most critical segregation of duties in the centralized computer services function?

A) systems development from data processing
B) data operations from data librarian
C) data preparation from data control
D) data control from data librarian

Question 27

Some companies separate systems analysis from programming/program maintenance.All of the following are control weaknesses that may occur with this organizational structure except

A) systems documentation is inadequate because of pressures to begin coding a new program before documenting the current program
B) illegal lines of code are hidden among legitimate code and a fraud is covered up for a long period of time
C) a new systems analyst has difficulty in understanding the logic of the program
D) inadequate systems documentation is prepared because this provides a sense of job security to the programmer

Question 28

A widespread natural disaster is a risk associated with a ROC.

Question 29

Adequate backups will protect against all of the following except

A) natural disasters such as fires
B) unauthorized access
C) data corruption caused by program errors
D) system crashes

Question 30

All of the following are issues of computer security except

A) releasing incorrect data to authorized individuals
B) permitting computer operators unlimited access to the computer room
C) permitting access to data by unauthorized individuals
D) providing correct data to unauthorized individuals

Question 31

A cold site backup approach is also known as

A) internally provided backup
B) recovery operations center
C) empty shell
D) mutual aid pact

Question 32

An advantage of a recovery operations center is that

A) this is an inexpensive solution
B) the initial recovery period is very quick
C) the company has sole control over the administration of the center
D) none of the above are advantages of the recovery operations center

Question 33

For most companies,which of the following is the least critical application for disaster recovery purposes?

A) month-end adjustments
B) accounts receivable
C) accounts payable
D) order entry/billing

Question 34

All of the following are control risks associated with the distributed data processing structure except

A) lack of separation of duties
B) system incompatibilities
C) system interdependency
D) lack of documentation standards

Question 35

The major disadvantage of an empty shell solution as a second site backup is

A) the host site may be unwilling to disrupt its processing needs to process the critical applications of the disaster stricken company
B) intense competition for shell resources during a widespread disaster
C) maintenance of excess hardware capacity
D) the control of the shell site is an administrative drain on the company

Question 36

Segregation of duties in the computer-based information system includes

A) separating the programmer from the computer operator
B) preventing management override
C) separating the inventory process from the billing process
D) performing independent verifications by the computer operator

Question 37

A mutual aid is the lowest cost disaster recovery option,but has shown to be effective and low risk.

Question 38

Critical applications should be identified and prioritized by the user departments,accountants,and auditors.

Question 39

An advantage of distributed data processing is that individual end user groups set specific IT standards without concern for the broader corporate needs.

Question 40

The least important item to store off-site in case of an emergency is

A) backups of systems software
B) backups of application software
C) documentation and blank forms
D) results of the latest test of the disaster recovery program

Question 41

A disadvantage of distributed data processing is

A)the increased time between job request and job completion.
B)the potential for hardware and software incompatibility among users.
C)the disruption caused when the mainframe goes down.
D)that users are not likely to be involved.

Question 42

Which of the following disaster recovery techniques may be least optimal in the case of a disaster?

A)empty shell
B)mutual aid pact
C)internally provided backup
D)they are all equally beneficial

Question 43

The following are examples of specific assets except

A)application maintenance
B)data warehousing
C)highly skilled employees
D)server maintenance

Question 44

Explain why certain duties that are deemed incompatible in a manual system may be combined in a CBIS computer based information system environment.Give an example.

Question 45

Which of the following is true?

A)Core competency theory argues that an organization should outsource specific core assets.
B)Core competency theory argues that an organization should focus exclusively on its core business competencies
C)Core competency theory argues that an organization should not outsource specific commodity assets.
D) Core competency theory argues that an organization should retain certain specific non-core assets in-house.

Question 46

Which of the following is a feature of fault tolerance control?

A)interruptible power supplies
B)RAID
C)DDP
D)MDP

Question 47

Which of the following is not true?

A) Management may outsource their organizations' IT functions, but they cannot outsource their management responsibilities for internal control.
B) section 404 requires the explicit testing of outsourced controls.
C) The SAS 70 report, which is prepared by the outsourcer's auditor, attests to the adequacy of the vendor's internal controls.
D) Auditors issue two types of SAS 70 reports: SAS 70 Type I report and SAS 70 Type II report.

Question 48

Segregation of duties in the computer-based information system includes

A) separating the programmer from the computer operator
B) preventing management override
C) separating the inventory process from the billing process
D) performing independent verifications by the computer operator

Question 49

Which of the following is true?

A) Core competency theory argues that an organization should outsource specific core assets.
B) Core competency theory argues that an organization should focus exclusively on its core business competencies
C) Core competency theory argues that an organization should not outsource specific commodity assets.
D) Core competency theory argues that an organization should retain certain specific non-core assets in-house.

Question 50

Which of the following is NOT a potential threat to computer hardware and peripherals?

A)low humidity
B)high humidity
C)carbon dioxide fire extinguishers
D)water sprinkler fire extinguishers

Question 51

Which of the following would strengthen organizational control over a large-scale data processing center?

A)Requiring the user departments to specify the general control standards necessary for processing transactions.
B)Requiring that requests and instructions for data processing services be submitted directly to the computer operator in the data center.
C)Having the database administrator report to the manager of computer operations.
D)Assigning maintenance responsibility to the original system designer who best knows its logic.

Question 52

All of the following tests of controls will provide evidence about the physical security of the computer center except

A) review of fire marshal records
B) review of the test of the backup power supply
C) verification of the second site backup location
D) observation of procedures surrounding visitor access to the computer center

Question 53

All of the following tests of controls will provide evidence about the adequacy of the disaster recovery plan except

A) inspection of the second site backup
B) analysis of the fire detection system at the primary site
C) review of the critical applications list
D) composition of the disaster recovery team

Question 54

Which of the following is not true?

A) Large-scale IT outsourcing involves transferring specific assets to a vendor
B) Specific assets, while valuable to the client, are of little value to the vendor
C) Once an organization outsources its specific assets, it may not be able to return to its pre-outsource state.
D) Specific assets are of value to vendors because, once acquired, vendors can achieve economies of scale by employing them with other clients

Question 55

What are the three primary CBIS functions that must be separated?

Question 56

Which of the following disaster recovery techniques is has the least risk associated with it?

A)empty shell
B)ROC
C)internally provided backup
D)they are all equally risky

Question 57

Which of the following is NOT a control implication of distributed data processing?

A)redundancy
B)user satisfaction
C)incompatibility
D)lack of standards

Question 58

All of the following are recommended features of a fire protection system for a computer center except

A) clearly marked exits
B) an elaborate water sprinkler system
C) manual fire extinguishers in strategic locations
D) automatic and manual alarms in strategic locations

Question 59

Which of the following is not true?

A) When management outsources their organization's IT functions, they also outsource responsibility for internal control.
B) Once a client firm has outsourced specific IT assets, its performance becomes linked to the vendor's performance.
C) IT outsourcing may affect incongruence between a firm's IT strategic planning and its business planning functions.
D) The financial justification for IT outsourcing depends upon the vendor achieving economies of scale.

Question 60

The following are examples of commodity assets except

A) network management
B) systems operations
C) systems development
D) server maintenance

Question 61

What primary IT functions must be separated in a centralized firm?

Question 62

For disaster recovery purposes,what criteria are used to identify an application or data as critical?

Question 63

What is IT Governance?

Question 64

Describe two tests that an auditor would perform to ensure that the disaster recovery plan is adequate.

Question 65

What is an auditor looking for when testing computer center controls?

Question 66

Why should new systems development activities be segregated from the program change (maintenance)function.

Question 67

Briefly outline transaction cost economics as it relates to IT outsourcing.

Question 68

Why should the tasks of systems development and maintenance be segregated from operations?

Question 69

Describe the components of a disaster recovery plan.

Question 70

What is a recovery operations center? What is its purpose?

Question 71

Why is inadequate documentation a chronic problem?

Question 72

List three pairs of system functions that should be separated in the centralized computer services organization.Describe a risk exposure if the functions are not separated.

Question 73

. Why is poor-quality systems documentation a prevalent problem?

Question 74

What is RAID?

Question 75

What problems may occur as a result of combining applications programming and maintenance tasks into one position?

Question 76

Briefly explain the core-competency theory.

Question 77

What is a mirrored data center?

Question 78

The distributed data processing approach carries some control implications of which accountants should be aware.Discuss two.

Question 79

What exposures do data consolidation in a CBIS environment pose?

Question 80

What are commodity IT assets?