ACCT 4600 Test 4 Practice Test

What percentage of occupational fraud is committed by upper management?

19%

What percentage for frauds are detected by tips?

46%

Programming to customize the baseline system carry forward into later versions, saving some enterprises millions of dollars for customizations that do not need to be abandoned or redone.

False

The accounting profession is self-regulated.

False

The advantage to the stages approach to customizing an accounting system is that the new system goes "live" all at once.

False

The internal control category control environment includes identifying, analyzing, and managing risks affecting the ability to report financial data properly.

False

The stages approach to customization involves customizing and installing customer, vendor, employee, and remaining modules for the entire enterprise at the same time.

False

Which COSO Internal Control - Integrated framework essential component of an effective internal control system includes the accounting system for identifying, recording, processing, and reporting transactions and financial data?

Information and Communication

Which COSO Internal Control-Integrated Framework essential component of an effective internal control system involves assessing internal controls as well as the process for taking corrective action?

Monitoring

IT general Controls have a pervasive effect on all internal controls.

True

Internal controls for the accounting system are incomplete without IT controls.

True

Not even the strongest system of controls can eliminate all risk of organizations being defrauded by employees who are sufficiently motivated to find loopholes.

True

SOX emphasizes a strong system of internal control as a way of avoiding Enron-sized accounting frauds.

True

SOX section 404 requires each annual report of a publicly traded company to contain an internal control report to contain a assessment of the effectiveness of the company's internal control structure and procedures.

True

To provide an adequate separation of functions in the accounts receivable business process, maintaining the subsidiary accounts receivable ledger should be the responsibility of _____________.

accounts receivable

The prices entered on sales orders should be independent of the sales order function. To achieve this transaction cycle control, the company's ordering system should use

an independently prepared master price list authorized by management.

The three types of functions that normally should be segregated to promote internal control are

authorizing transactions, recording transactions, and custody of assets.

A proposed transaction processing application will have many data capture sources and outputs in paper and electronic form. To ensure that transactions are not lost during processing, an IS auditor should recommend the inclusion of:

automated systems balancing.

The function responsible for forwarding voucher checks directly to payees is __________.

cash disbursements

Corruption involves theft of assets for personal gain.

False

Input controls ensure data is processed properly.

False

The customization approach that involves the system going "live" all at once is called

Big bang

An essential input field that should contain data is empty. The data edit control that would detect this error is a ______.

Completeness check

Which of the following types of data validation editing checks is used to determine if a field contains data, and not zeros or blanks?

Completeness check

Which general IT control covers acquisition, implementation, and maintenance of system software including the operating system, DBMS, network software, and security software?

Computer operations controls

Management's philosophy and operating style are part of which component of internal control?

Control environment

The component of internal control that is the foundation for all other components is _______.

Control environment

As business processes for a new system are planned, workflow management is not considered.

False

By changing business processes to match the baseline system, a company can expect to increase the need for custom programming.

False

Which SO section requires the public accounting firm that audits the financial statements of the company to issue an attestation report regarding the effectiveness of the company's internal controls?

Section 404. Management Assessment of Internal Controls

Which organization was created by Sarbanes-Oxley Act 2002?

Public Company Accounting Oversight Board (PCAOB)

Which of the following is not an objective of internal control?

Relevance of financial statements

Which COSO Internal Control-Integrated Framework essential component of an effective internal control system involves identifying, analyzing, and managing risks that affect a company's ability to record, process, summarize, and report financial data properly?

Risk Assessment

Which of the following is not part of the audit committee's responsibilities?

The organization's ability to process data efficiently and effectively

What documents typically accompany the physical shipment of goods to a customer?

The packing list and a bill of lading.

Which of the objectives listed below is not considered part of the internal control process?

The prevention of fraud and embezzlement.

A gap analysis is done to

compare the baseline accounting system to the customized accounting system that meets the company's needs.

To reduce the possibility of losing data during processing, the FIRST point at which control totals should be implemented is:

during data preparation.

Application controls are often classified as

input, processing, and output.

Which of the following documents is used to post sales on account to customers in the accounts receivable ledger?

invoices

A warehouse employee uses a document to fulfill a customer order. The employee is most likely using a:

picking list

The document(s) which accounts payable should use to verify a purchase transaction is (are)

purchase requisition, invoice, receiving report, and purchase order.

The de[artment or function that is responsible for selecting a vendor to order materials from is

purchasing.

The identification and analysis of differences between the values contained in two substantially identical files or between a detail file and a control is ______?

reconciliation