Question 1

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:

Accepted Answer

Scanning the error control log is the best method to control and monitor transactions that were erroneous and previously rejected. This log will specifically track errors and their resolutions, ensuring that corrected transactions are reentered and reprocessed.

Question 2

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

Accepted Answer

Allowing computer programmers to operate the computer for regular processing runs, especially with programs they have written, can lead to a lack of segregation of duties. This could potentially allow for unauthorized changes or errors to go undetected.

Question 3

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

Accepted Answer

Separating programmers and computer operators into different sections helps maintain a clear division of duties, which is a fundamental principle of good internal control. This separation prevents any single individual or department from having both the responsibility for executing tasks and the authority to review or control those tasks, reducing the risk of errors or fraud.

Question 4

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:

Accepted Answer

Distributing payroll checks to employees by a payroll department supervisor could lead to potential fraud or misappropriation of funds, as it does not provide adequate segregation of duties. Segregation of duties is a key principle of internal control, aiming to reduce the risk of errors or fraud by dividing responsibilities among different individuals.

Question 5

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:

Accepted Answer

This control is a limit or reasonableness test because it checks whether the calculated payroll amount falls within a predefined acceptable range (in this case, not exceeding $300) and takes specific action (printing an error message) if the value is outside of this range.

Question 6

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:

Accepted Answer

Control totals are an effective control procedure for ensuring that all payroll checks are processed. By comparing the total number of checks or total payroll amount expected with what was actually processed, discrepancies like the omission of checks can be detected before distribution.

Question 7

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?

Accepted Answer

A valid-code test checks if the data entered for a particular field falls within the predefined set of values. Since the highest account code is 750 and 996 is outside this range, a valid-code test would detect the error.

Question 8

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

Accepted Answer

Manual and Automated are classifications of IT controls based on their implementation method.

Question 9

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:

Accepted Answer

The Data Control Group is typically responsible for ensuring the accuracy and integrity of data entering the system. When erroneous data are detected, this group would review and follow up on the error report to correct the issues, ensuring that data processing is accurate and reliable.

Question 10

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:

Accepted Answer

A periodic test against physical count is the best control procedure to ensure the accuracy of the inventory master file. This involves physically counting the inventory and comparing it with the records in the master file to identify and correct any discrepancies.

Question 11

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:

Accepted Answer

Reconciliation of control totals by a control clerk is the best control procedure in this scenario because it directly addresses the issue of ensuring that the transactions processed match the expected outcomes. By having a control clerk reconcile the control totals, any discrepancies, such as the missing transactions, would be identified and corrected. This method provides a systematic check against errors that might not be caught by an operator who is busy with other tasks or by automated systems that may not flag specific types of errors without direct human oversight.

Question 12

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?

Accepted Answer

The most common method for backing up data in an online, real-time system is to periodically dump the disk files to magnetic tape along with the period's transactions. This ensures that there is a backup of both the data and the transactions that have occurred since the last backup.

Question 13

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

Accepted Answer

The payroll accounting department is responsible for preparing periodic reports to the government regarding employee earnings and withholding taxes. The responsibility for approving employee time records rests with department managers or supervisors. The maintenance of records of employment, discharges, and pay increases may be the responsibility of the HR department or payroll department, depending on the company's structure. The distribution of paychecks to employees may also be the responsibility of the HR department or an external payroll service provider.

Question 14

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:

Accepted Answer

The answer of A transaction involving a charge to a...

Question 15

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?

Accepted Answer

Determining that figures in the report are reasonable is typically the responsibility of the user department because they are most familiar with the operational context and can assess whether the output aligns with expectations and real-world data. Other options involve technical aspects more likely to be managed by IT or data processing personnel.

Question 16

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

Accepted Answer

Preventive, Detective, and Corrective controls are classifications based on the function of IT controls. Preventive controls aim to prevent errors or fraud; Detective controls aim to detect errors or fraud that has occurred; Corrective controls aim to correct errors or issues that have been detected.

Question 17

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:

Accepted Answer

An input edit routine in a batch processing system with sequential files should ensure that data is in the correct sequence to prevent processing errors.

Question 18

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:

Accepted Answer

Remote storage of a copy of the disk and the transactions since the disk was copied is the best control procedure because it ensures that a backup is available in a different location, protecting against data loss due to physical damage at the primary storage site.

Question 19

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:

Accepted Answer

A limit test is the best control procedure in this scenario because it checks data for reasonableness by comparing it against predetermined limits. In this case, a limit test could flag any hours worked that exceed a normal workweek (e.g., over 40 hours), prompting a review to ensure accuracy, thus preventing errors like misreading 38 as 98.

Question 20

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:

Accepted Answer

A check digit is a form of redundancy check used for error detection on identification numbers, which would have detected the incorrect length of the customer account code.

Quiz 7: Computer Controls for Organizations and Accounting Information Systems