Module 11

The position responsible for managing the flow of documents and reports in and out of the computer operations department is the Data entry clerk. Computer operator. Data control clerk. File librarian.

Data control clerk.

Define the internet of things (IoT)

Wide‐spread connection of electronic devices to the Internet

Haufinger buys one widget each day for use in his factory and pays for the widget using one bitcoin. On three recent days, the value of one bitcoin was: Day 1: $2,200 US Day 2: $2,400 US Day 3: $2,500 US According to the IRS, what is the cost of the widgets purchased for these three days for tax purposes? 1 bitcoin $2,200 $2,367 $7,100

$2,367 The average cost is the correct cost, since bitcoins are treated as intangible assets.

Information criteria of COBIT

Effectiveness Efficiency Confidentiality Integrity Availability Compliance Reliability

A trackball is an output device. True False

False

Access to specific forms and reports in a database is normally determined by the application programmer who developed the form or report. True False

False

Automated transaction processing is risky and should be avoided in accounting systems. True False

False

Because many managers don't understand computers very well, greater opportunity exists for analytics (i.e., management review of system generated data) in manual than computer-based systems. True False

False

Cloud-based systems decrease the risk of hacker attackers compared with systems that store data locally. True False

False

Data stored in RAM is more permanent than data stored in ROM. True False

False

Flash drives are also called floppy drives. True False

False

For consistency and legal reasons, the procedures for voluntary and involuntary terminations should be identical. True False

False

Forgotten user passwords are a critical security risk in computer-based systems. True False

False

HMDs may be fully, partially, or non-immersive. True False

False

Implementation as a Service (IaaS) is one example of a cloud-based system application. True False

False

It is common to include external data in Management Information Systems (MISs). True False

False

It is not necessary to separate the functions of systems programmers from application programmers. True False

False

MIS generates debits and credits for entry into the AIS. True False

False

Magnetic disks are part of the central processing unit. True False

False

OLRT systems are sequential. True False

False

Payment systems are increasing owned by financial institutions. True False

False

Robotics applications are examples of neural networks. True False

False

Systems programmers are part of the Computer Operations department. True False

False

The IoT is likely to reduce data stores in accounting systems. True False

False

The data control clerk is responsible for providing security for the data files. True False

False

The sequence of steps for determining an entity's long term goals is called governance. True False

False

Two-tiered architecture is preferred in larger ERP systems. True False

False

AI depends heavily on __________ and _________. RPA, predictive analytics Fast computers, big data Privacy, confidentiality Analytics, machine learning

Fast computers, big data

Define "Digitization"

Movement of data to electronic form. More than "just going paperless" "Digitizing Business Processes" Generally involves a Transformation

Acme Corp. uses data on the strength of a user's touch on a keyboard to partially authenticate users. This is an example of: Big data. Biometrics. Multifactor authentication. Integrated authentication.

Multifactor authentication. Because the system will not use only the user's touch on keyboard, it will also use other authentication metrics (notice the "partially" in the sentence above).

Which of the following is least likely to be an example of big data? Dark data. Multifactor identification data. Sales data. Video conferencing data.

Sales data. While these data will find their way into a big data pool (eventually), this is the least likely to be an example of big data, from the offered alternatives.

Cyber-incidents should be classified as to severity True False

True

Dark data is sometimes called meta-data. True False

True

Data attributes are an important component of the COBIT model. True False

True

Data mining is common in data-driven DSS. True False

True

What is data mining?

Searching data in a warehouse to discover patterns and relationships in historical data.

Electronic audit trails can substitute for traditional paper audit trails. True False

True

Governance is the set or processes and structured, implemented by the board, to oversee an organization's pursuit of its objectives. True False

True

HMDs are a potentially disruptive technology for accounting systems. True False

True

Halo is an automated journal entry analysis system. True False

True

If transactions are relatively independent, a batch system may be appropriate. True False

True

Just-in-time inventory management is facilitated by the use of Point-of-Sale (POS) systems. True False

True

Life cycles are shorter for digitized products. True False

True

Mainframe computer applications are often input / output intensive. True False

True

Most AI systems require big data. True False

True

Most ERP installations use client/server network configuration. True False

True

One of the benefits of implementing an ERP system from a single vendor is long-run cost savings related to system maintenance. True False

True

Operational systems are sometimes called transaction processing systems. True False

True

Recording the total for a transaction involving the sale of 11 items at a cost of $1.00 each as $10.00 instead of $11.00 is an example of a clerical error. True False

True

Records in batch accounting systems are less current than in OLRT systems. True False

True

Simulations are a form of gamification. True False

True

Systems analysts should not have access to the "live" production equipment and software. True False

True

The COBIT model facilitates the integration of corporate goals, accounting controls, and IT facilities and processes. True False

True

How does segregation of duties differ in an automated, compared to a manual, accounting system?

Segregated functions are often combined in automated systems, with automated processes then used as a compensating control.

Which of the following is an example of a non-financial transaction? Sending a purchase order to a vendor to purchase items for re-sale. Creating a cash receipt to mark receipt of a customer payment. Preparing a payroll check to send to an employee in payment of the current month's wages. Approving a vendor invoice for payment.

Sending a purchase order to a vendor to purchase items for re-sale is an example of a non-financial transaction, as it does not require a debit/credit entry in the accounting system (there is no completed transaction, just a request for a transaction).

An accountant at Henry Higgins Language Lessons must sort the master file before processing recent transactions to update the master file. Henry Higgins uses ______ file storage. Sequential RAID Optical disk Data mart

Sequential

A computer sitting on a user's desk that includes a keyboard and a mouse is unlikely to be a(n): Desktop. Laptop. Server. Thin client.

Servers are generally in isolated (protected) locations and do not include a keyboard and a mouse for access. Servers are accessed from client computers.

Define "Product Differentiation"

Setting your product apart from your competitors.'

The widespread adoption of the IoT will: Speed the adoption of automated authentication. Reduce the need for monitoring. Reduce security. Reduce costs.

Speed the adoption of automated authentication. Reduce the need for monitoring. With the widespread data provided by electronic devices, there will be less need for user authentication by password.

The business processes found in Enterprise Resource Planning (ERP) systems are based on best practices. True False

True

In the COBIT model, __________ is an (are) example(s) of an information criterion while _________ is an example of (an) IT resource(s). Penetration testing results; routers Acquisition and Implementation; a capacitor Standards for user response times, network structure IT staff, computer servers

Standards for user response times, network structure Standards for user response times is an example of an information criterion related to system availability. The network structure is an example of an IT resource.

The data control clerk is responsible for managing the flow of documents and reports in and out of the Computer Operations department. True False

True

The potential for systemic and systematic errors is greater in a computerized than a manual environment. True False

True

The use of multi-factor authentication is increasing. True False

True

The employee handbook includes important internal control system information. True False

True

Anyone with a fast computer can "mine" (i.e., create) bitcoins. True False

True

What are point‐of‐sale (POS) systems?

• Combine online, real‐time processing with automated data capture technology • Highly accurate, reliable, and timely

What is a mainframe computer?

•Computer used by commercial organizations to support mission‐critical tasks. •Input/output (I/O) intensive (i.e., a very large numbers of simple transactions). Frequently support thousands of users.

Most large IT investments have integrated seamlessly and easily into their organization's overall strategy. True False

False

Office automation systems are primarily created for use by engineers and other professionals. True False

False

Systems programmers are part of the applications development department. True False

False

Define "Dark data"

Activity, operational or social media data that is unused or underused • Data about data (i.e., "meta‐data")

The legal and privacy issues of big data are largely resolved through existing legislation. True False

False

What is an example of the use of the cloud to access hardware? IaaS PaaS SAP ERP

IaaS

What is an example of the use of the cloud to access software and programs? IaaS PaaS SaaS SAP

SaaS

Bitcoin transactions are stored in a database. True False

True

Blockchain is an encrypted, distributed audit trail database. True False

True

COBIT focuses more on IT processes than does COSO. True False

True

Cloud-based systems are highly scalable. True False

True

Cloud-based systems often achieve economies of scale. True False

True

Cloud-based systems often rely on outsourcing. True False

True

Gandalf Grey is a partner in Grey, Aragon, and Mithrander, CPAs. Mr. Grey asks you to provide him with an introduction as to how big data may be useful to accounting firms.

1. Define and describe big data. 2. Give examples of risks and benefits of big data. 3. Identify some possible sources of big data in organizations. 4. Describe the relevance of big data to CPAs. 5. Describe the control considerations to consider in big data initiatives.

What is a cloud-based system?

A cloud-based system is a virtual data pool that is created by contracting with a third-party data storage provider.

What is a data warehouse?

A database for organizational decision making. Data from the live databases are copied to the warehouse so that data can be queried without reducing the performance (i.e., speed) or stability (i.e., reliability) of the live systems.

Which of the following is least likely to be an advantage of an automated accounting system? A distinct, easily followed audit trail Processing speed Fewer idiosyncratic errors Less likelihood of intrusion

A distinct, easily followed audit trail

Which of the following examples shows the highest level of intelligence of an AI system? User identification Translating financial statements into the structure and format of international financial reporting standards A fleet of drones monitors a client's inventory of livestock and reports on the health and well-being of the herd Analyzing financial statements for a client

A fleet of drones monitors a client's inventory of livestock and reports on the health and well-being of the herd This is an example of a physical task that includes a sophisticated visual recognition system and advanced analytics.

The best starting point for an organizational big data initiative is: Data mining. A social media data assessment. A governance structure. Assessing controls

A governance structure

What are some of the advantages of the emerging payment system?

A new system reduces costs and increase online sales, it is cheaper and seller and user friendly.

Why doesn't bitcoin use a client-server network, like most business computing?

A peer-to-peer network is decentralized, which is essential to bitcoin's goal of independence from centralized authority, governments, and financial institutions.

Which of the following statements is correct regarding information technology (IT) governance? A primary goal of IT governance is to balance risk versus return over IT and its processes. IT governance is an appropriate issue for organizations at the level of the board of directors only. IT goals should be independent of strategic goals. IT governance requires that the Control Objectives for Information and related Technology (COBIT) framework be adopted and implemented.

A primary goal of IT governance is to balance risk versus return over IT and its processes. The purpose of IT governance is to strategically manage and acquire IT resources in support of the organization's mission. This requires balancing the risks and returns from IT assets.

Which of the following is least likely to be a source of big data? Wearables A thermostat A single-page pdf document A cow

A single-page pdf document

What is the purpose of executive support systems (ESS) and strategic support systems (SSS)?

A subset of decision support systems (DSS) especially designed for forecasting and making long-range, strategic decisions. As such, they have a greater emphasis on external data. Sometimes called "DSS for dummies."

What data are stored in random access memory (RAM)?

A temporary data store for information in process

Which of the following types of systems would you use to record the number of hours worked during the current pay period for each of your employees? An office automation system (OAS). A decision support system (DSS). A transaction processing system (TPS). A partitioned system (PS).

A transaction processing system (TPS). Transaction processing systems (TPSs) support the day-to-day activities of the business (purchasing of goods and services, manufacturing activities, sales to customers, cash collections, payroll, etc.).

Describe the control objectives for information and related technology (COBIT) framework.

A widely used international standard for identifying best practices in IT security and control. Provides management with an information technology (IT) governance model that helps in delivering value from IT processes and in understanding and managing the IT related risks.

The IT Steering Committee at Henry Flower's Flower shop is assessing whether to purchase, or internally develop, a new CRM (customer relationship management) system. In the COBIT model, this is best classified as an example of Planning and Organization. Acquisition and Implementation. Delivery and Support. Monitoring.

Acquisition and Implementation.

The fixed assets and related depreciation of a company are currently tracked on a password-protected spreadsheet. The information technology governance committee is designing a new enterprise-wide system and needs to determine whether the current fixed asset process should be included because the current system seems to be working properly. What long-term solution should the committee recommend? Continuing to use the current spreadsheet process because there have been no issues in this area. Developing a new fixed asset system to manage the assets and related depreciation. Purchasing a stand-alone fixed asset program for managing the assets and related depreciation. Adopting the fixed-asset module of the new system for integration.

Adopting the fixed-asset module of the new system for integration. One of the goals of an enterprise-wide system is to integrate" all data maintained by the organization into a single database." This option best achieves the goal of a single, organization-wide system with which to bind the entire organization together.

How are advanced analytics improving user authentication?

Advanced analytics use user information and use patterns for identification, e.g., typical login locations, the feel of the users' touch on the mouse or keyboard, programmed physical gestures that the user executes to gain system access. They reduce the need for redundant, individual authentication challenges (e.g., passwords) to gain access.

The CPU includes all of the following except ALU. RAM. Control unit. All of the above are part of the CPU.

All of the above are part of the CPU.

What are solid state drives?

Also called flash drives (also known as jump drives or thumb drives). •Small, portable devices that store 500 megabytes to several gigabytes. •Device contains no moving parts. Similar to the RAM.

Explain how an AI system can be biased.

An AI system can be biased in three ways: (1) data (i.e., collecting only a biased subset of available data); (2) predictions (i.e., the reasoning built into the system can reflect the biases of developers); and (3) learning (i.e., the learning of AI systems can be "biased" to be consistent with those of the developers).

A client would like to implement a management information system that integrates all functional areas within an organization to allow information exchange and collaboration among all parties involved in business operations. Which of the following systems is most effective for this application? A decision support system. An executive support system. An office automation system. An enterprise resource planning system.

An enterprise resource planning system.

Winthrop P. Snigledorf calls about his outrageous cable bill and is greeted by the "voice" of an AI program. This system is probably best described as an example of Machine learning. A robot. An intelligent agent. An expert system.

An intelligent agent. Intelligent agents interact with humans (e.g., Siri® on the Apple® iPhone®) and have natural language processing ability.

This system is most likely to include external data. Operational system. MIS. DSS. ESS.

ESS.

List the three main functional areas within an information technology department.

Applications development Systems administration and programming Computer operations

Which department is responsible for developing new systems?

Applications development.

During the annual audit, it was learned from an interview with the controller that the accounting system was programmed to use a batch processing method and a detailed posting type. This would mean that individual transactions were Posted upon entry, and each transaction had its own line entry in the appropriate ledger. Assigned to groups before posting, and each transaction had its own line entry in the appropriate ledger. Posted upon entry, and each transaction group had a cumulative entry total in the appropriate ledger. Assigned to groups before posting, and each transaction group had a cumulative entry total in the appropriate ledger.

Assigned to groups before posting, and each transaction had its own line entry in the appropriate ledger.

Challenges of big data include all of the following except: Storage. Quality. Integration. Attrition and retention.

Attrition and retention. What do attrition and retention have to do with big data? Why would attrition and retention be higher with big data? Attrition and retention of what, the data or the employees?

Authorization in an automated system is likely to be Parallel, Tagged. Unnecessary. Automated.

Automated

Do automated systems increase or decrease the potential for data analytics compared with manual accounting systems?

Automated systems increase the potential for data analytics since they are designed to include data and text analytic subsystems (e.g., expert systems, DSS, executive support systems).

Why is bitcoin a favorite payment mechanism of criminals and terrorists?

Bitcoin transactions were originally designed to be untraceable. This is of obvious importance if one is engaged in illegal activity.

At Mega-Construction, secured payments are sent to suppliers as soon materials are received and scanned. Many attributes of the received goods are also scanned and recorded immediately on receipt (e.g., time received, quality indicators, item location through GPS functionality). This information is shared through a distributed ledger. Mega-Construction is likely using _______________. Blockchain TCP/IP Bitcoin STMP

Blockchain

Bloomsdale wants to determine if the company from whom she buys seafood is buying only sustainable seafood. Bloomsdale may be able to use ____________ to find this information. Bitcoin Multifactor identification Blockchain OLTP

Blockchain A transaction record that is stored in blockchain can be designed to contain this information.

The ledger that tracks bitcoins is a(n) ____________ ledger while the network that accounts for bitcoins is a(n) ___________________ network. Accounting; centralized Centralized; client-server Bit furcated; peer-to-peer Blockchain; peer-to-peer

Blockchain; peer-to-peer

Selling a digitized product can: Decrease its cost. Improve its quality. Both A and B. Neither A nor B.

Both A and B.

Roles for accountants in big data include all of the following except: Assessing the quality and integrity of big data. Integrating big data into evaluations of internal control. Building big data systems. Data scientists.

Building big data systems.

A marketing manager at Hubert Humbert Fashion Designers is using a component of its organization-wide ERP system to determine which accounts generate the most profitable returns to the company. The manager is most likely using the _________ component of the system. CRM OLAP OLTP Supply chain management

CRM (customer relationship management)

Big data: Is similar to automated authentication. Changes an entity's risk profile. Is unrelated to financial reporting. Is the monetization of data assets.

Changes an entity's risk profile. Big data adds a new set of risks to an entity and changes some existing risks.

Vindaloo Corporation wants data storage for a large volume of data that is unlikely to change often. They should consider using A hard disk. Magnetic tape. Cloud storage. Memory (RAM).

Cloud storage. It can handle a large volume of data and can be adapted to data that changes infrequently.

To maintain effective segregation of duties within the information technology function, an application programmer should have which of the following responsibilities? Modify and adapt operating system software. Correct detected data entry errors for the cash disbursement system. Code approved changes to a payroll program. Maintain custody of the billing program code and its documentation.

Code approved changes to a payroll program.

An organization's computer help desk function is usually a responsibility of the Applications development unit. Systems programming unit. Computer operations unit. User departments.

Computer operations unit. Help desks are usually a responsibility of computer operations because of the operational nature of their functions (for example, assisting users with systems problems involving prioritization and obtaining technical support/vendor assistance).

What personnel in an organization should have access to computer operations ("live data")?

Computer operators (and systems programmers, though their access should be limited to times when they need to update systems hardware or software).

Which of the following would lessen internal control in a computer processing system? The computer librarian maintains custody of computer program instructions and detailed listings. Computer operators have access to operator instructions and detailed program listings. The control group is solely responsible for the distribution of all computer output. Computer programmers write and debug programs which perform routines designed by the systems analyst.

Computer operators have access to operator instructions and detailed program listings. Computer operators who have access to detailed program listings have the opportunity to modify the programs

Which of the following characteristics distinguishes computer processing from manual processing? Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing. Errors or fraud in computer processing will be detected soon after their occurrences. The potential for systematic error is ordinarily greater in manual processing than in computerized processing. Most computer systems are designed so that transaction trails useful for audit purposes do not exist.

Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing.

Define "transaction files."

Computerized data files equivalent to the journals found in a manual accounting system.

Define "master files."

Computerized data files equivalent to the ledgers found in manual accounting system.

Define "supercomputers." What is their purpose?

Computers at the leading edge of processing capacity. Supercomputers are used for calculation‐intensive scientific applications (e.g., weather forecasting and climate research). E.g., Deep Blue by IBM

Rootin' Roberta of Sharpie Shooters Range Corp. is charged with replacing the computer used in the accounting system. She wants a quick boot time and fast access to storage. She doesn't need a lot of storage, but she wants maximum security in storage. She should consider purchasing: Computers that primary rely on optical disks. A system that primary rely on RAID storage. A system that primarily relies on cloud-based storage. Computers that primary rely on SSD storage.

Computers that primary rely on SSD storage.

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 Supervisor of computer operations. Systems analyst. Control group. Computer programmer.

Control group. The control group is responsible for providing a continuous review function by supervising and monitoring input, operations, and the distribution of output (i.e., a continuous internal audit function).

Today organizations are using microcomputers for data presentation because microcomputer use, compared to mainframe use, is more Controllable. Conducive to data integrity. Reliable. Cost effective.

Cost effective. In cooperative processing, microcomputers are more cost effective than mainframes for data entry and presentation because microcomputers are better suited to frequent screen updating and graphical user interfaces.

Define Platform as a Service (PaaS).

Creating cloud-based software and programs Salesforce.com's Force.com is an example of PaaS.

Define "Big data"

Creation, analysis, storage and dissemination of extremely large data sets • From Garter Reports: "high volume, velocity, and/or variety information assets that demand new, innovative forms of processing for enhanced decision making, business insights or process optimization"

Real-time processing is most appropriate for which of the following bank transactions? Credit authorizations for consumer loan applicants Biweekly payroll for bank employees Purchases of fixed assets Expiration of prepaid liability insurance

Credit authorizations for consumer loan applicants Speed! It's all about speed here. Loan applicants want fast answers.

Concerns about the IoT include all of the following except: Reduced privacy. Cycle times. Data storage. Risk exposure.

Cycle times A cycle time in manufacturing is the time required to produce an order. In computer science, it is the time between one random access memory event to the next. Neither of these definitions is relevant to the IoT.

Which of the following information technology (IT) departmental responsibilities should be delegated to separate individuals? Network maintenance and wireless access. Data entry and antivirus management. Data entry and application programming. Data entry and quality assurance.

Data entry and application programming.

Walmart analyzes point-of-sale data to determine sales trends, develop marketing campaigns, and predict customer loyalty. Walmart is engaged in _____________ using __________. Online marketing; social media data Industrial espionage; internal data Data mining; big data Audit analytics; a database

Data mining; big data

Each of the following is an enabler of big data except: Data warehousing. Analytics. Dark data. IoT.

Data warehousing.

Peetie's Pet Care has a system that examines large data sets to determine patterns in clients' use of its facilities. This is most likely an example of: Operational systems. Management information systems (MISs). Data-driven DSSs. Model-driven DSS.

Data-driven DSSs. This is a data-drive DSS that is engaging in data mining.

The ability to add or update documentation items in data dictionaries should be restricted to Database administrators. System programmers. System librarians. Application programmers.

Database administrators. Access must be controlled to ensure integrity of documentation although "read" access should be provided to other parties as it is important for applications development and maintenance.

Internal auditors at Henry Flower's Flower shop are undertaking a comprehensive review of outsourcing contracts and policies as part of improving service quality. In the COBIT model, this is best classified as an example of Planning and Organization. Acquisition and Implementation. Delivery and Support. Monitoring

Delivery and Support.

How is Deloitte using AI to improve audits?

Deloitte is partnering with several vendors to automate audit tasks including document review, confirmations, inventory counts, disclosures, predictive risk analytics, and producing and filling client request lists.

An internal audit manager requested information detailing the amount and type of training that the IT department's staff received during the last year. According to COSO, the training records would provide documentation for which of the following principles? Exercising oversight of the development and performance of internal control Demonstrating a commitment to retain competent individuals in alignment with objectives Developing general control activities over technology to support the achievement of objectives Holding individuals responsible for their internal control responsibilities in the pursuit of objectives

Demonstrating a commitment to retain competent individuals in alignment with objectives

Most client/server applications operate on a three-tiered architecture consisting of which of the following layers? Desktop client, application, and database. Desktop client, software, and hardware. Desktop server, application, and database. Desktop server, software, and hardware.

Desktop client, application, and database.

Define digitization and explain its potential use as a business strategy.

Digitization is the movement of information to electronic form. Digitization can both create new products (e.g., e-books, streaming video, and audio) and reduce costs (e.g., e-magazines vs. print magazines).

What is an immersive display?

Display in which user is immersed in an alternate reality • provides additional information relative to a pure visual display (e.g., game, surgery, or industrial production applications)

Bitcoin uses a(n) ______________ ledger on a ______________ network. Accounting; reticulated spline Centralized; client-server. Distributed; peer-to-peer Wallet; peer-to-peer

Distributed; peer-to-peer

Why is user access increasingly migrating to automated authentication?

Doesn't everyone hate passwords? Automated authentication will increasingly use multi-factor, including biometric, authentication.

Components of COBIT model

Domains and processes Information criteria IT resources

Which of the following is not an example of gamification? Building graphics and video displays into simulations to teach workers about dangers at a factory A competition among salespeople to earn points Dressing up as a cow to promote a fast food restaurant Creating a game to teach students about managerial accounting

Dressing up as a cow to promote a fast food restaurant

How is AI (artificial intelligence) different from common applications of computers today (e.g., spreadsheets and word processing)?

Emerging AI technologies include reasoning and judgment abilities that do not exist in most existing applications. Examples of these capabilities include natural language processing systems and robots that control real-time manufacturing processes.

Checkpoint auto leasing is a small company with six employees. The best action that it can take to increase its internal control effectiveness is Hire temporary employees to aid in the segregation of duties. Hire a bookkeeper to perform monthly "write up" work. Clearly delegate responsibilities to each employee for the functions that they are assigned. Engage the owner in direct participation in the activities, including financial record-keeping, of the business.

Engage the owner in direct participation in the activities, including financial record-keeping, of the business.

Define online transaction processing system (OLTP).

Enterprise resource planning (ERP) modules that comprise the core business functions: sales, production, purchasing, payroll, financial reporting, etc. These functions collect the operational data for the organization and provide the fundamental motivation for the purchase of an ERP.

Which of the following is an example of applications software that a large client is most likely to use? Enterprise resource planning. Operating system. Central processing unit. Value-added network.

Enterprise resource planning.

A company has a significant e-commerce presence and self-hosts its website. To assure continuity in the event of a natural disaster, the firm should adopt which of the following strategies? Back up the server database daily. Store records off-site. Purchase and implement RAID technology. Establish off-site mirrored Web server.

Establish off-site mirrored Web server. This would provide for continuous duplication of data in geographically separated locations.

Business transformation through blockchain is likely to occur __________________ and requires ___________ adoption. Quickly; supplier Eventually; widespread Eventually; supplier Quickly; widespread

Eventually; widespread Blockchain requires widespread user adoption; business transformation cannot occur until there is sufficient adoption among users. Therefore, blockchain transformation will likely not occur quickly.

How can CPAs use big data to serve clients?

Example applications include risk analysis (e.g., of a material misstatement on the client's financial statements), pioneering new business uses of data, and serving as the "data scientist" in helping clients find uses for new and existing data.

The Board of Directors of Martin Manufacturing Enterprises, Inc. is meeting to consider whether they should expand their manufacturing facilities to include a product line. Although the company's current financial position and sales potential for existing products are part of the information the Board must consider, of even greater importance is external information concerning economic conditions, market projects for the new product, the cost of long-term financing alternatives, and information about potential competitors. The Board of Directors' decision process would be best supported by a Management information system (MIS). Knowledge management system (KMS). Decision support system (DSS). Executive support system (ESS).

Executive support system (ESS). Executive support systems (ESSs) are a subset of DSS that are especially designed for forecasting and making long-range, strategic decisions, and they place greater emphasis on external data. The need to consider a large proportion of external information in the decision process makes an executive support system (ESS) the best choice listed.

Monster Lorenzo Sneakers has a division that combines information from several sources into one comprehensive database. The included data relates to customer information from a company's point-of-sale systems (the cash registers), its website, its mailing lists, and its comment cards. It also includes separate data about employees, including time cards, demographic data, and salary. If Monster Lorenzo Sneakers decided to launch a big data initiative, what is the most likely effect on this division? Expansion Contraction Elimination Refurbishing

Expansion The described division is a data warehouse. Big data initiatives generally result in expanding data warehouses.

Spirit Line Beverages sponsors a contest for its programmers with prizes for the winning teams. This is an example of ______________ that is intended to __________________. Online marketing; build social media data Industrial espionage; build internal data Data mining; use big data Gamification; build motivation and team rapport

Gamification; build motivation and team rapport

All of the following are potential applications of HMDs except: Real-time system monitoring. Generating system logs. Visualizing. Video conferencing.

Generating system logs.

Which of the following risks increases the least with cloud-based computing compared with local server storage for an organization that implements cloud-based computing? Data loss. Vendor security failure. Global visibility. System hacks.

Global visibility.

____ is the name of the processes and structures, implemented by the board, to achieve organizational goals. Governance Matching Oversight Strategy

Governance

One important purpose of COBIT is to Guide managers, users, and auditors to adopt best practices related to the management of information technology. Identify specific control plans that should be implemented to reduce the occurrences of fraud. Specify the components of an information system that should be installed in an e-commerce environment. Suggest the type of information that should be made available for management decision making.

Guide managers, users, and auditors to adopt best practices related to the management of information technology.

What is a Head Mounted Display (HMD)

HMDs are display devices that are worn on the head (like glasses) or as a part of a helmet. They include one or two small optical displays.

Hubert Humbert Fashion Designers implemented an organization-wide ERP system that failed. Which of the following is the least likely reason for the failure of such a system? A poor system development process Lack of management support Hardware failures Underestimating system implementation time and complexity

Hardware failures are very unusual. They are an unlikely reason for an ERP failure.

Big data initiatives should: Be independent of existing IT initiatives. Have a strong governance structure. Be a subset of the event response plan. Be overseen by the internal audit department.

Have a strong governance structure.

Management of a financial services company is considering a strategic decision concerning the expansion of its existing local area network (LAN) to enhance the firm's customer service function. Which of the following aspects of the expanded system is the least significant strategic issue for management? How the expanded system can contribute to the firm's long-range business plan. How the expanded system would support daily business operations. How indicators can be developed to measure how well the expanded system achieves its business objectives. How the expanded system will contribute to the reduction of operating costs.

How the expanded system will contribute to the reduction of operating costs. Cutting costs, per se, is the least important issue. Payoff, or return on costs, is a more relevant strategic consideration.

Compared to manual systems, automated systems have ____ risks related to remote access, ____ risks related to the concentration of information, and, ______ opportunities for directly observing processes: Increased, increased, increased Decreased, decreased, decreased Increased, increased, decreased Increased, decreased, increased

Increased, increased, decreased

Which of the following is true of enterprise resource planning (ERP) systems? I. The online analytical processing system (OLAP) provides data warehouse capabilities for the ERP system. II. The ability of an ERP system to provide an integrated view of transactions in all parts of the system is a function of the online transaction processing (OLTP) system. I only. II only. Both I and II. Neither I nor II.

I only. The online analytical processing system (OLAP) incorporates data warehouse and data mining capabilities within the ERP. The online transaction processing system (OLTP) records the day-to-day operational transactions and enhances the visibility of these transactions throughout the system. It is primarily the OLAP and not the OLTP, that provides an integrated view of transactions in all parts of the system. The OLTP is primary concerned with collecting data (and not analyzing it) across the organization.

Which of the following procedures would enhance the control of a computer operations department? I. Periodic rotation of operators. II. Mandatory vacations. III. Controlled access to the facility. IV. Segregation of personnel who are responsible for controlling input and output. I, II. I, II, III. III, IV. I, II, III, IV.

I, II, III, IV.

Which of the following statements is (are) true. I. A greater level of control is necessary in automated than manual systems. II. The uniformity of transaction processing is higher in automated than manual systems. Both I and II. I only. II only. Neither I or II.

II only.

Which of the following is true of batch processing? I. In batch processing, data is captured in a transaction file as transactions occur. II. Periodically (once a day, once a week, etc.), the group of transactions in the transaction file are edited, sorted, and then the transactions are used to update the master file. I only. II only. Both I and II. Neither I nor II.

II only. In batch processing, transactions are first gathered together in a group and then keyed into a transaction file. Periodically, the transaction file is edited, sorted, and then the transactions are used to update the master file.

How can the use of information technology (IT) create product differentiation?

IT can create new products (e.g., e-books), new markets (e.g., online markets such as eBay and Amazon resellers), and new delivery expectations (e.g., streamed immediately to a computer). IT can also reduce costs and improve product quality.

Which of the following is least likely to be a benefit of a big data initiative? IT cost savings. Targeted marketing. Improved system monitoring. Better compliance.

IT cost savings.

Control Objectives for Information and Related Technology (COBIT) provides a framework for Internet-based systems. IT governance and management of enterprise IT. Auditing IT Systems. The implementation for new technology.

IT governance and management of enterprise IT.

How can blockchain reduce auditors' required work?

If auditors can begin with a transaction record that need not be audited, considerable time (and client money) will be saved in internal and external auditing.

An enterprise resource planning (ERP) system has which of the following advantages over multiple independent functional systems? Modifications can be made to each module without affecting other modules. Increased responsiveness and flexibility while aiding in the decision-making process. Increased amount of data redundancy, since more than one module contains the same information. Reduction in costs of implementation and training.

Increased responsiveness and flexibility while aiding in the decision-making process.

How does the audit trail differ in an automated, compared to a manual, accounting system?

In automated systems, audit trails are often in imaged or other electronic forms. In manual systems, they were paper.

An accountant at Holly Golightly Tattoos builds a spreadsheet to manage the customer database. Because of the rapid growth of the business, the spreadsheet quickly becomes unmanageably complex. This problem illustrates which of the following issues? Inadequate scope and scalability Lack of strategic focus Lack of strategic investment Digitization

Inadequate scope and scalability Inadequate scope and scalability is an example of creating a system that is too small for a much larger problem. The spreadsheet in this case was an inadequate tool for addressing a much larger problem (i.e., customer relationship management).

An enterprise resource planning (ERP) system has which of the following advantages over multiple independent functional systems? Modifications can be made to each module without affecting other modules. Increased responsiveness and flexibility while aiding in the decision-making process. Increased amount of data redundancy, since more than one module contains the same information. Reduction in costs for implementation and training.

Increased responsiveness and flexibility while aiding in the decision-making process.

An enterprise resource planning system is designed to Allow nonexperts to make decisions about a particular problem. Help with the decision-making process. Integrate data from all aspects of an organization's activities. Present executives with the information needed to make strategic plans.

Integrate data from all aspects of an organization's activities.

The primary target audience of COBIT includes ___________ while the primary target audience of COSO includes __________________. Internal auditors; external auditors Board of directors; management Board of directors; external auditors Management; internal auditors

Internal auditors; external auditors COBIT is primarily focused on internal organizational IT processes, and therefore includes internal auditors as a primary focus. In contrast, COSO is primarily focus on external processes, and therefore includes a primary focus on external auditors.

Automating security systems changes: Human error. Biometrics. Oversight. Internal controls.

Internal controls Control over access to systems is a part of accounting controls.

In an accounting information system, which of the following types of computer files most likely would be a master file? Inventory subsidiary. Cash disbursements. Cash receipts. Payroll transactions.

Inventory subsidiary. A master file is a file containing relatively permanent information used as a source of reference and periodically updated, and this is characteristic of an inventory subsidiary file.

Give examples of emerging payment processing system

It is the processing system for Credit cards, Apple Pay, Samsung Pay, Walmart Pay, PayPal, Venmo, Amazon "One‐Click" payments Easier to use, fewer keystrokes for data entry, options for data storage, options for alternative payment sources

How is KPMG using IBM's Watson™ system?

KPMG is using Watson™ to generate predictive analytics that help clients identify and manage financial statement risks.

What is a knowledge work system?

Knowledge work systems facilitate the work activities of professional-level employees (engineers, accountants, attorneys, etc.) by providing information relevant to their day-to-day activities (e.g., how the company has handled specific types of audit exceptions) and/or by automating some of their routine functions (e.g., computer-aided systems engineering [CASE] packages used by programmers to automated some programming functions).

Gus McCrae, an accountant at Lonesome Dove Cattle Ranch, builds a spreadsheet to track cow movements between locations. However, there are so few movements of cattle between locations that the spreadsheet is unhelpful. This problem illustrates which of the following issues? Inadequate scope and scalability Lack of strategic focus Lack of strategic engagement Digitization

Lack of strategic focus

_____, ______, and ______ are all elements of a manual accounting system. Journals; ledgers; e-vouchers Ledgers, automated transactions, assets Journals, receivables ledgers, concentration of information Ledgers, journals, invoices

Ledgers, journals, invoices

Which of the following internal control procedures would prevent an employee from being paid an inappropriate hourly wage? Having the supervisor of the data entry clerk verify that each employee's hours worked are correctly entered into the system. Using real-time posting of payroll so there can be no after-the-fact data manipulation of the payroll register. Giving payroll data entry clerks the ability to change any suspicious hourly pay rates to a reasonable rate. Limited access to employee master files to authorized employees in the personnel department.

Limited access to employee master files to authorized employees in the personnel department. It would help prevent unauthorized changes in the wage rates in the master files.

A hospital that is launching a big data initiative should initially consider all the following except Privacy law. Qualitative characteristics of the data. Roles and responsibilities. Load at capacity.

Load at capacity. Considering load at capacity is unlikely to be an important initial consideration for a big data initiative.

The state of emerging online payment systems is: Increasing reliance on financial institutions. Improved security. Improved privacy. Lower costs to sellers.

Lower costs to sellers.

Four monitoring processes of COBIT

M1. Monitor and evaluated IT performance M2. Monitor and evaluate internal control M3. Ensure regulatory compliance M4. Provide IT guidance

The system that most resembles a managerial accounting, budgeting system is: Operational system. MIS. DSS. ESS.

MIS take planning information (budgets, forecasts, etc.) data and compare it to actual results in periodic management reports (summary reports, variance reports, and exception reports). Hence, MIS can be considered similar to, and may incorporate, traditional budgeting systems.

Potential short- and medium-term risks of AI include all the following except Machine learning. Confirmation bias. Privacy issues. Prediction bias

Machine learning. Machine learning is a goal of AI systems, not a risk.

Which of the following constitutes a weakness in the internal control of a computer system? One generation of backup files is stored in an off-premises location. Machine operators distribute error messages to the control group. Machine operators do not have access to the complete systems manual. Machine operators are supervised by the programmer.

Machine operators are supervised by the programmer Good internal control in a computer system requires that operators, programmers, and the library function be segregated.

Roberta is a programmer who writes applications for Parsnips Health Care. She also has access to the file library. This is a concern because she may: Grant system access inappropriately to others. Make changes in applications. Make changes to both the live and archive copies of programs. Fail to follow system change protocols.

Make changes to both the live and archive copies of programs. If she changes both live and archive copies of programs, changes that she has made may not be detected.

In a large multinational organization, which of the following job responsibilities should be assigned to the network administrator? Managing remote access. Developing application programs. Reviewing security policy. Installing operating system upgrades.

Managing remote access The network administrator is responsible for maintaining the hardware and software aspects of a computer network.

In a computer-based system, the equivalent of a subsidiary ledger is a Transaction file. Archive file. Master file. Reference file.

Master file.

Which of the following is true about master files? Master files contain a historical record of all transactions processed by the system. To maintain a manageable file size, master files are periodically purged from the system. Master files contain both processed and unprocessed transactions. Master files are the computerized counterpart of ledgers found in manual systems.

Master files are the computerized counterpart of ledgers found in manual systems. Master files maintain balances by accounts (financial statement accounts, customer accounts, vendor accounts, etc.), just as ledgers do in manual systems.

Describe some recent applications of the IoT in medicine, insurance, banking, and marketing.

Medicine: patient monitoring; insurance: monitoring road conditions, warehouses, and offices; banking: monitoring ATMs, offices, and vaults; marketing: monitoring customer interests and physical location.

Which of the following is not considered a secondary storage device? Magnetic disk. Microcomputers. Flash drives. Optical disc.

Microcomputers

In COBIT, the process of reviewing system response time logs falls within the _______ control process domain. Acquire and implement. Deliver and support. Monitor and evaluate. Plan and organize.

Monitor and evaluate. The process of reviewing system response logs is within the "monitor the processes" (M1) activity, which falls within the "monitor and evaluate" domain.

Internal auditors at Henry Flower's Flower Shop are undertaking a comprehensive review to determine if the company has complied with privacy regulations regarding customer data. In the COBIT model, this is best classified as an example of Planning and Organization. Acquisition and Implementation. Delivery and Support. Monitoring.

Monitoring

Applications of supercomputers include scientific applications and calculation-intensive applications in finance and business. True False

True

Which of the following is NOT true of online/real-time transaction processing systems? Records are usually updated as transactions occur. Random access storage devices are normally required. Network access is not usually required to implement online/real-time systems. Errors are captured and corrected as the transaction occurs.

Network access is not usually required to implement online/real-time systems. Online/real-time systems are updated as transactions occur and consequently require networked information systems based on random access storage devices. Because the information system is updated immediately, errors are detected as soon as the transaction occurs.

Aragon Elessar is a partner in Aragon, Merry, Pippin, and the Ring, CPAs. Mr. Elessar asks you to provide him with an introduction as to how the Internet of Things may change business and accounting firms?

New skill sets for CPAs - Managing the IoT and the resulting "big data" • Widespread availability of sensors (e.g., trucks, animals, people, production processes, medical processes) • Opportunities to consult with clients on business opportunities • Automated information collection and data streaming for audits (internal and external) and tax engagements • Real‐time managerial accounting monitoring data • Biggest change: Continuous auditing and monitoring of activities and processes • Biggest challenges: managing big data and resulting privacy, confidentiality, and data quality issues

Who is responsible for managing and maintaining bitcoin? The U.S. Treasury The President's Council of Economic Advisors NSA No one

No one Bitcoin is set up to be independent of any central authority.

A data analyst at Hubert Humbert Fashion Designers is using a component of its organization-wide ERP system to analyze customer sales to determine the optimal opening and closing times for its retail stores. The analyst is most likely using the _________ component of the system. CRM OLAP OLTP Supply chain management

OLAP This is an example of a data mining application within an online analytical processing (OLAP) system.

Simone works as an airline reservations agent. She mostly likely interacts with a: Batch system. Batched, online system. POS system. OLRT system.

OLRT system.

An accountant at Hubert Humbert Fashion Designers is using a component of its organization-wide ERP system to prepare a payroll tax return. The accountant is most likely using the _________ component of the system. CRM OLAP OLTP Supply chain management

OLTP

A general type of IT system that is designed to improve the productivity of daily office work is referred to as a(n) Office automation system. Transaction processing system. Decision support system. Executive information system.

Office automation system. Office automation systems include the software tools of daily work, including word processing programs, spreadsheets, email, and electronic calendars.

Credit Card International developed a management reporting software package that enables members interactively to query a data warehouse and drill down into transaction and trend information via various network set-ups. What type of management reporting system has Credit Card International developed? On-line analytical processing system. On-line transaction-processing system. On-line executive information system. On-line information storage system

On-line analytical processing system. OLAPs are an increasingly important multidimensional analytical tool. An OLAP is a modification and expansion of an on-line transaction processing system to provide the capabilities and functionalities identified in this question.

Which of the following transaction processing modes provides the most accurate and complete information for decision making? Batch. Distributed. Online. Application.

Online

Which of the following statements about processing methodologies is true? Batch systems, though inexpensive to develop, are much more expensive to operate than online real-time databases. Online real-time processing is especially desirable when transactions occur continuously and are interdependent. The implementation of both batch processing and online real-time processing require access to a networked computer system. Although designed to help ensure accuracy in a batch processing environment, batch control totals are frequently used to control accuracy in online real-time systems as well.

Online real-time processing is especially desirable when transactions occur continuously and are interdependent. Batch processing is especially desirable when transactions occur periodically and are independent.

Which of the following areas of responsibility are normally assigned to a systems programmer in a computer system environment? Systems analysis and applications programming. Data communication hardware and software. Operating systems and compilers. Computer operations.

Operating systems and compilers. Systems programmers are given responsibility for maintaining system software, including operating systems and compilers.

Which of the following devices "burns" data onto a surface? Magnetic tape reader. Supercomputer. ROM. Optical disc recorder.

Optical disc recorder.

What is an example of the use of the cloud to create software and programs? IaaS PaaS SaaS SAP

PaaS

HMDs: Are fully immersive. Include three optical displays. Partly result from the IoT. Depend on an unoccluded field of vision.

Partly result from the IoT

Alejandro uses Amazon "one-click." This is an example of: IoT. Big data. Smart data. Payment processing

Payment processing

IT resources of COBIT

People Applications Technology Facilities Data

Define "batch processing."

Periodic transaction processing method in which transactions are processed in groups.

What is computer hardware?

Physical equipment of the computer system and the equipment that your computer uses to connect to other computers or computer networks.

Four Domains of COBIT

Plan and Organize Acquire and Implement Deliver and Support Monitor and Evaluate

The IT Steering Committee at Henry Flower's Flower Shop is determining whether the basic infrastructure of the company should include a significant component of cloud computing. In this exercise, the committee is primarily using the company's IT strategic plan to conceptually consider how cloud computing advances or detracts from the company's business objectives. In the COBIT model, this is best classified as an example of Planning and Organization Acquisition and Implementation Delivery and Support Monitoring

Planning and Organization

Which of the following is least likely to be an example of accounting work in the AI era? Working with an AI system to harvest and clean data for use in predicting fraud risk. Working on a legacy system, with AI assistance, that is uneconomical to replace with AI technology. Developing an AI system to analyze the risk of investing in the extraction industry. Preparing financial statements for a client.

Preparing financial statements for a client.

Which of the following is not a part of the central processing unit? Control unit. Arithmetic unit. Logic unit. Printer unit.

Printer unit. The printer is a separate output device.

Define "Oversight"

Process of managing and monitoring an organization's operations to achieve internal control and effectively manage risks.

A company that sells hand-carved statues from rural Indonesia online is using a ___________ strategy: Digitization Product differentiation Cost leadership Integrated

Product differentiation This is an example of a product differentiation strategy since competitors are unlikely to be able to sell this same product.

What is the purpose of secondary storage devices?

Provide permanent storage for programs and data. Depending on the way the devices are set up, they can either be online (the data on the device is available for immediate access by the CPU) or offline (the device is stored in an area where the data is not accessible to the CPU).

What is the computer process called when data processing is performed concurrently with a particular activity and the results are available soon enough to influence the particular course of action being taken or the decision being made? Batch processing. Real-time processing. Integrated data processing. Random access processing.

Real-time processing Online real-time systems are those for which processing is performed as data are input and the results are available immediately.

What type of computerized data processing system would be most appropriate for a company that is opening a new retail location? Batch processing. Real-time processing. Sequential-file processing. Direct-access processing.

Real-time processing is the best method for use by retail businesses

Which of the following is an important outcome of the use of blockchain? Closed-form accounting Reduced auditing and compliance costs Increased centralization of accounting systems Impenetrable authentication

Reduced auditing and compliance costs If accounting transactions are stored on an automated, secured network, then auditing and compliance costs should go down.

Which of the following is a major motivation for the adoption of new payment systems? Generating real-time data streams. Monitoring physical processes. Improving privacy. Reducing abandonment rates.

Reducing abandonment rates.

Hubert Humbert Fashion Designers is considering implementing an organization-wide ERP. Which of the following is least likely to be a motivation for implementing such a system? Reducing and eliminating data redundancy Improving organizational agility Improving data analytic capabilities Reducing system complexity

Reducing system complexity ERP systems tend to increase system complexity.

List six risks that are greater in an automated than in a manual system.

Reliance on faulty programs Unauthorized access Unauthorized changes Failure to update systems Inappropriate manual intervention Data loss

Define Software as a Service (SaaS).

Remote access to software. Office 365, a suite of office productivity programs, is an example of SaaS.

What are the duties of the file librarian.

Responsible for controlling IT-related files, checking them in and out only as necessary to support scheduled jobs. Should not have access to live operating equipment or data.

Describe the responsibilities of the computer operations department.

Responsible for the day-to-day operations of the computer system

Which of the following artificial intelligence information systems cannot learn from experience? Neural networks. Case-based reasoning systems. Rule-based expert systems. Intelligent agents.

Rule-based expert systems do not learn from experience; they simply execute rules..

Compared to online real-time processing, batch processing has which of the following disadvantages? A greater level of control is necessary. Additional computing resources are required. Additional personnel are required. Stored data are current only after the update process.

Stored data are current only after the update process.

Explain why big data has only recently become feasible

Such data sets have recently become feasible due to advances in computer storage technologies (e.g., the cloud), advanced data analytics, and massive computing power.

Jody's Hardware Store developed a new module for the accounting system to monitor and forecast contractor purchases by vendor month. The old system was a manual. The most important risk related to the new system is Idiosyncratic processing errors. Systematic processing errors. Automated processing of transactions. Computer-initiated transactions.

Systematic processing errors.

Which of the following employees normally would be assigned the operating responsibility for designing a computer installation, including flowcharts of data processing routines? Computer programmer. Data processing manager. Systems analyst. Internal auditor.

Systems analyst. The systems analyst is responsible for designing the computer system, including the goals of the system and means of achieving those goals, based upon the nature of the business and its information needs. The systems analyst also must outline the data processing system for the computer programmer with system flowcharts.

Define management information systems.

Systems designed to support routine management problems based primarily on data from transaction processing systems.

Morgan Property Management, Inc. recently switched from a manual accounting system to a computerized accounting system. The system supports online real-time processing in a networked environment, and six employees have been granted access to various parts of the system in order to perform their jobs. Relative to the manual system, Morgan can expect to see That functions that had previously been spread across multiple employees have been combined. An increase in the incidence of clerical errors. A decrease in the incidence of systemic errors. A decrease in the need for access controls to the accounting records.

That functions that had previously been spread across multiple employees have been combined.

What is a "central processing unit (CPU)"?

The CPU is the control center of the computer system. It has three principal components.

What is the relationship of the IoT to big data?

The Internet of Things (IoT) is an example of a big data application.

Jones and Willy recently implemented an automated accounting system to replace their manual accounting system. While setting up the system, they find that: They need to permanently run the manual and automated accounting systems as a control over processing. The automated system requires controls related to people, software, and hardware. Access controls are of less importance in the new system. The company's external auditors are best qualified to set up the new system.

The automated system requires controls related to people, software, and hardware.

Governance is primarily the responsibility of: Top management. The board. The CEO. Those individuals who are identified by SOX Section 404 as responsible for the system of internal control.

The board.

Define Scalability.

The capacity of a system to grow with the information processing needs of an organization

Automating security systems is an example of a digital task. True False

True

Define business strategy

The interrelated procedures for determining an entity's long-term goals and identifying the best approach for achieving those goals.

What are the three determinants of blockchain security?

The security of blockchain depends on three factors: independent confirmation; asymmetric encryption; and cheap, fast computing capacity.

Define organizational governance

The set of processes and structures, implemented by the board, to oversee the activities of the organization in pursuit of its objectives.

Which of the following most likely represents a significant deficiency in the internal control? The systems analyst reviews applications of data processing and maintains systems documentation. The systems programmer designs systems for computerized applications and maintains output controls. The control clerk establishes control over data received by the information systems departments and reconciles totals after processing. The accounts payable clerk prepares data for computer processing and enters the data into the computer.

The systems programmer designs systems for computerized applications and maintains output controls. The systems programmer should not maintain custody of output in a computerized system. At a minimum, the programming, operating, and library functions should be segregated in such computer systems.

What are magnetic disks?

These are random access devices. Data can be stored on, and retrieved from, the disk in any order. This is the most efficient way to store and retrieve individual records. Magnetic disks are the most commonly used form of secondary storage.

What are data-driven decision support systems (data-driven DSS)?

These systems process large amounts of data to find relationships and patterns that are useful in decision making.

What are decision support systems (DSSs)?

These systems provide information to mid- and upper-level management to assist them in managing nonroutine problems and in long-range planning. Unlike MISs, DSSs frequently include external data in addition to summarized information from the TPS and include significant analytical and statistical capabilities.

What are enterprise resource planning systems (ERPs) ?

These systems provide transaction processing, management support, and decision-making support in a single, integrated package. By integrating all data and processes of an organization into a unified system, ERPs attempt to eliminate many of the problems faced by organizations when they attempt to consolidate information from operations in multiple departments, regions, or divisions.

What are operational systems?

These systems support the day-to-day activities of the business (purchasing of goods and services, manufacturing activities, sales to customers, cash collections, payroll, etc.) Also known as transaction processing systems (TPS).

What is an optical disk?

These use laser technology to "burn" data on the disk (although some rewritable disks use magnetic technology to record data). In general, read-only and write-once optical disks are a more stable storage medium than magnetic disks. Optical disks, like magnetic disks are random access devices. There are several different types of optical disks.

Describe the responsibilities of application programmers.

They work under the direction of the systems analyst to write the actual programs that process data and produce reports.

Bathsheba Everdene, CEO of The Madding Crowd Theatre Company wants help in forecasting demand for theatre productions. She and the other senior executives in the company don't want to learn a bunch of computer commands or code to use this system. As envisioned, the system will largely conduct analytics of external data and present it to the executives. What type of system would you propose to Ms. Everdene?

This is an ESS • Supports forecasting and long-range, strategic decisions • Analytics of external data • Simple, easy-to-use interface or "dashboard" • Can be ad hoc, i.e., for a specific purpose, e.g., monitoring competitor pricing

Describe the category of AI used in Netflix's system to advise viewers about which movies they are likely to enjoy.

This is primarily a numeric analysis system. It primarily compares a user's numeric rating of movies to find similar movies that a user is likely to enjoy.

What is an online analytical processing system (OLAP)?

This system incorporates data warehouse and data mining capabilities into an ERP system.

Why are there time lags in batch processing systems?

Time lags are inherent part of batch processing •There is always a time delay between transaction, recording, and master file update

Compared to batch processing, real-time processing has which of the following advantages? Ease of auditing. Ease of implementation. Timeliness of information. Efficiency of processing.

Timeliness of information.

Which of the following factors has the greatest impact on the design of an effective management reporting system? Number of transactions to be processed Types of decisions to be made Number of authorized users Number of regulatory agencies to be satisfied

Types of decisions to be made Management reporting systems exist to aid decisions and reporting. Hence, the types of decisions that are supported by the system is the most important design element in creating a management reporting system.

Describe some control issues in big data initiatives

Understanding: does top management understand big data and its risks? Data quality: what processes ensure reliable, accurate, complete, and timely data? Confidentiality and privacy: are we complying with law and internal standards for protecting information? Availability: are event response plans in place and tested to ensure system access and reliability?

Define Infrastructure as a Service (IaaS).

Use of the cloud to access virtual hardware, such as computers and storage. Examples include Amazon Web Services and Carbonite.

How is read-only memory (ROM) used?

Used to permanently store the data needed to power on the computer; includes portions of the operating system.

When a client's accounts payable computer system was relocated, the administrator provided support through a dial-up connection to a server. Subsequently, the administrator left the company. No changes were made to the accounts payable system at that time. Which of the following situations represents the greatest security risk? User passwords are not required to be in alphanumeric format. Management procedures for user accounts are not documented. User accounts are not removed upon termination of employees. Security logs are not periodically reviewed for violations.

User accounts are not removed upon termination of employees.

Encryption protection is least likely to be used in which of the following situations? When transactions are transmitted over local area networks. When wire transfers are made between banks. When confidential data are sent by satellite transmission. When financial data are sent over dedicated leased lines.

When transactions are transmitted over local area networks. Various factors need to be considered. Encoding is important when confidential data are transmitted between geographically separated locations that can be electronically monitored. Although LANs may need encryption protection, the type of data and the described communication media make the other options appear more vulnerable.

Which of the following is an advantage of a computer-based system for transaction processing over a manual system? A computer-based system Does not require as stringent a set of internal controls. Will produce a more accurate set of financial statements. Will be more efficient at producing financial statements. Eliminates the need to reconcile control accounts and subsidiary ledgers.

Will be more efficient at producing financial statements.

Winthrop P. Snigledorf pays his employees in bitcoins to avoid paying payroll taxes and so that his employees don't have to pay income taxes on these earnings. Which of the following is an accurate assessment of these actions? Winthrop is correct—neither payroll taxes nor income taxes are due on wages paid in bitcoins. Winthrop is incorrect—payroll taxes need not be paid on wages paid in bitcoins; employees must pay income taxes on these earnings. Winthrop is incorrect—payroll taxes must be paid on wages paid in bitcoins; employees do not need to pay income taxes on these earnings. Winthrop is incorrect—both payroll taxes and income taxes must be paid on these earnings.

Winthrop is incorrect—both payroll taxes and income taxes must be paid on these earnings. he IRS treats bitcoins as property; hence they are taxed the same as cash paid to employees would be.

How can blockchain facilitate multifactor identification?

With blockchain, users might need only a single point of identification (e.g., a fingerprint) to link to their permanent record, which could be confirmed by any transaction identifier in the record.

Kentucky Fried Possum has invested heavily in IT over the past 5 years but has consistently earned lower returns on these investments than it expected. The Company's CEO, "The Kernel," asks you why this might be true.

• A problem shared by many businesses. Common problems with IT investments include: • Lack of IT strategic focus—many IT investments are "bottom up." • Lack of strategic investment—over‐investment in existing businesses and inadequate investment in "transformative" technologies. • Inadequate scope and agility—IT investments in business units, inadequately scaled to meet changing business needs.

Grindel Freshensmitt owns 385 franchise restaurants in the U.S. and Canada. He is interested in better managing his operations and business. He has asked to meet to learn about how emerging advances in artificial intelligence and machine learning can help him. Please write a memo that outlines your plan for an initial meeting with Mr. Freshensmitt.

• First figure out the problems / issues / only then consider technologies • Client / context: restaurant chain ‐ Potential issues / area of focus • Labor costs and quality • Food costs and quality • Reservation system? • CRM (customer relationship management) system • What are existing issues / problems? • Look at financial statements including cost data

Jane Eye‐eris President and CEO of Thornfield Hall Optical Supply which is a manufacturer of custom lens and eye care products. The company, which is struggling to make profits, currently relies on mostly batch processing in its accounting system. The current system is ~ 10 years old and lacks many characteristics that seem to be present in competitors' systems. Ms. Eye‐er ponders whether replacing these legacy systems with OLRT systems is worth the cost.

• What's the financial status of the company? • Replacing the core systems essential to survival? ( Business Essential) • Why do it? • Real-time data and analytics • Better customer service (!) • Consider also linking to supplier and customer systems (EDI?)

What is "online, real‐time (OLRT) processing"?

•Continuous, immediate transaction processing method • Transactions processed individually as they occur

John Galt, Chief Innovation Officer and CEO of Atlas Slouches and Blockheads has a great idea. He proposes that the company adopt a "best of breed" approach to hardware and software. That is, use the best hardware and the best software regardless of company or design. Therefore, forexample, he proposes using, for the core transaction processing of the company, the Apple iOS with Deep Blue, the supercomputer designed by IBM. Please comment on Mr. Galt's idea.

•This is a question that is better answered by a IT professional. •Operating systems are designed to run on specific hardware and computers. •It may be possible to "emulate" "foreign" software on hardware but it may not run as efficiently as "native" operating system software. •It is likely to be very difficult and inefficient to try and run an Apple iOS on an IBM supercomputer. (Won't work) •While there may be applications in which this is desirable it is not realistic as a core transaction processing system. Attempting to do so would challenging and would yield dubious benefits.