Accounting Information Systems Final Exam

Choose from the following the best description of enterprise risk management (ERM).

A comprehensive process of identifying, categorizing, prioritizing, and responding to a company's risk.

Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Choose the best definition of a distributed system.

A distributed system is like a decentralized system; however, it goes a step further as it no longer has a central site connecting all the system nodes.

A Center of Excellence (COE) is best described as

A specialized team in a company dedicated to providing unique support, usually technological, to the entire business.

Payroll for a business should be processed in which department?

Accounting

A risk-aware culture at a business is characterized by:

All of the options

Data integrity involves...

All of these answer choices are correct.

For what reason(s) do internal audit departments report to an audit committee?

All of these answer choices are correct.

Poor employee onboarding leads to high employee turnover. What risks are associated with high employee turnover?

All of these answer choices are correct.

Which of the following reasons can lead to the failure of internal controls?

All of these answer choices are correct.

Which of the following is NOT a Sarbanes-Oxley (SOX) Act requirement?

An internal audit report that confirms that management did not review financial statements before they were published.

As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Ashley Corp. During your evaluation you discover that Ashley Corp.'s employee data was part of a data breach from a third-party background check provider. What action do you recommend that Ashley Corp. take?

Ashley Corp. should require background check providers to have their own internal controls to ensure confidentiality and security of data.

Liz works as a purchasing manager. Liz must approve purchase orders input throughout the company before the order is placed. Which duty is Liz performing in this role?

Authorizing

Which of the following methods of control yields increased reliability and consistency?

Automated

What type of processing accumulates transactions into groups and processes them at regular intervals?

Batch

Which of the following human resources activities is frequently outsourced?

Benefits administration

Software is executed on a computer using _________.

Binary code

A _______ is a group of related business events designed to accomplish the business's strategic objectives.

Business Model

A business function is a high-level ______ or ______ that performs business processes to achieve company goals.

Business area, department

Which of the following documentation tools are typically used for documenting the business?

Checklists and questionnaires

Which COSO Internal Control Integrated Framework control component deals with the enforcement of accountability?

Control environment

Kyle, a manager for AB Enterprises, is considering hiring your consulting company to evaluate the usefulness of purchasing software for AB that will improve their information reporting capabilities. The software is complex and would require that AB hire someone knowledgeable or send a current employee for additional training. What kind of analysis will your consulting company perform for Kyle to determine if the software is a good purchase?

Cost-Benefit Analysis

In a relational database, data is stored in tables of related data. The database for Motorcycle Parts Warehouse has the following tables: Items, Employees, Sales, and Customers. Into which table would you insert a field to store the delivery address used to ship a customer their order?

Customers

Which characteristic refers to the completeness, accuracy, reliability, and consistency of data?

Data Integrity

Systems software is specialized software that runs a computer's hardware and other software. It is a platform for other software that coordinates all the activities throughout the system. A software used to define, manipulate, retrieve, and manage data is what type of system software?

Database Management System

Arrange the hierarchy of data elements in their correct order.

Databases, Files, Records, Fields, Bytes and Bits

Choose from the following the best definition of risk response.

Decide how the company will address the prioritized risks.

Kevin requires that the night manager responsible for closing the restaurant count the cash drawer and reconcile the total with cash sales for the day. Which type of control did Kevin implement?

Detective

The primary users of systems documentation are

Developers.

If an analyst asks: "Why did it happen?", he or she is asking which category of data analysis?

Diagnostic analytics

The following symbol indicates what in a process flowchart?

Document

Documentation is used to create, capture, evaluate, and audit processes in the AIS. When an area of the business is well documented, companies benefit through process improvements. Which of the following best defines process improvements?

Documentation empowers thorough reviews of a department and can point directly to areas where efficiencies can be gained.

Choose the phrase that best describes dynamic data.

Dynamic data may change after it is recorded.

What type of control activity is implemented to prevent malicious actions against company systems and data?

Employee access to the system is disabled immediately upon termination.

What occurs during an exit interview?

Employees meet with HR to discuss reasons for leaving and post-termination benefits.

A violation of employment laws for hiring could result in lawsuits, fines, or reputational damage. What kind of control activity might a company initiate to prevent such a risk?

Establish a policy that only the HR department extend offer letters for employment.

While emerging and disruptive technologies can increase efficiencies and make tasks easier, they also bring unpredictable risk to the business. The earlier the stage of adoption, the higher the risk, because unknown variables and a lack of history mean that companies cannot rely on past experiences to perform risk assessments. Risks related to emerging and disruptive technologies include all of the following, except:

Financial gain.

Which of the following documentation tools can be used for documenting processes and systems?

Flowcharts

When a control applies specifically to a software tool and the business processes and accounts that are linked to it, this control is classified as a(n)

IT application control.

One of the most important data analytics skills for all new graduates is the ability to...

Identify what data can be used to answer a business question.

Which of the following is an advantage of decentralized systems?

If one system fails, the other systems can still process transactions.

Operator documentation is defined as...

Information necessary for technical operators to execute and support the system.

From the following list, select the team that is well equipped to help a business manage the risks of emerging and disruptive technologies.

Internal Audit

Choose from the list below the best definition of Internet of Things (IoT).

Internet of Things is the connection of electronic devices to the internet through sensors, software, and other technologies.

What role in a company is responsible for designing and implementing controls?

Management

Which statement is true?

Management uses historical reports and data analytic insights to understand reasons and context to make decisions.

Scott and Beth have opened a Pizza Ranch franchise. Beth manages the team that takes orders and delivers pizzas. What process area demands most of Beth's focus?

Marketing, Sales, and Collections.

Companies need to store information, perform data analytics and calculations, and manage other financial-related functions. What is a common tool used for these data analytics functions?

Microsoft Excel

How are you responding to the risk if you purchase a new cell phone and later purchase a screen protector and phone case?

Mitigate the risk.

Which of the following is the most commonly used response to risk by businesses?

Mitigating it

Why has reputation risk grown in importance?

More people are using and accessing social media.

Extended reality is not a new concept. However, recently this technology has found its way into consumer's devices in an affordable and accessible manner. Choose the best definition of Augmented Reality (AR) from the list below.

Overlays reality with digital images.

An example of unstructured data is:

PDF files

Which of the following controls is an example of an IT general control?

Password policy

Which of the following statements concerning payroll is true?

Payroll is not as straightforward as simply distributing the hourly rate or annual salary to employees.

Which of the following management responsibility areas includes forecasting future performance?

Planning

An internal auditor has been asked to calculate an allowance for doubtful accounts. Which category of data analysis would this type of work be categorized as?

Predictive

____________ databases are the backbone of a company's operations.

Production

Which of the following activities would NOT result in a transaction in an accounting information system?

Receive a customer order.

Choose the best description of how Relational databases organize data.

Relational databases organize structured data in interrelated tables.

Which of the following statements about data redundancy is false?

Relational databases use cardinality and business rules to eliminate data redundancy.

To be useful for decision making, information must have what two fundamental characteristics?

Relevance and Faithful Representation

Phil works in the accounting department of a public company. Phil is tasked with preparing documentation of nonfinancial information for the company. In the COSO Internal Control Integrated Framework, where might Phil look for guidance on how best to present the information?

Reporting objectives section of the control objectives

Choose the best definition of risk transfer.

Risk transfer is the shifting of the risk to a third party.

The textbook discussed three control activity considerations for small businesses. In a smaller business, incompatible business functions are often combined. A small business may implement a compensating control such as manager supervision. This is an example of what control activity?

Segregation of duties

An organizational chart, often called an "org chart" for short, is a diagram that illustrates the employees in the company and their reporting relationship with one another. Which of the following is a use of org charts?

Showing segregation of duties.

An accountant would call the categorization of a risk, external or internal, the ________ of the risk.

Source

Which of the following is true of structured data?

Structured data is easily stored in tables.

What is the best definition of target residual risk?

Target residual risk is the goal after implementing a risk response.

A risk statement contains two parts:

The issue and the possible outcome.

Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. What is the best description of the financial module?

The most important ERP module that captures accounting data and generates financial documents, including financial statements, tax forms, and receipts.

Which of the following is a disadvantage of centralized systems?

The risk of business disruption is greater because any disruption impacts the entire system.

Which of the following statements is true?

Transaction-based accounting information systems record only accounting transactions.

Which of the following is the content provided to systems users to ensure they are successful using the system?

User documentation

Technology risk is:

When technology failures have the potential of disrupting business.

ERP systems are complex and expensive technology. The integration of all systems into a unified ERP system has certain goals. One goal is future cost savings. What does future cost savings mean in this context?

While the initial implementation cost and any customization of an ERP system are expensive, the long-term costs may be less associated with owning one system, as opposed to multiple systems.

"Risk appetite is part of __________." The phrase that most accurately completes this sentence is:

a company's culture.

Referential integrity states that

a foreign key cannot be inserted into a table unless it already exists as a primary key.

An Entity Relationship Diagrams (ERD) is

a graphical illustration of all the tables and their relationships in a database.

A decision shape in a process flowchart represents...

a yes/no or true/false question that must be answered for the process to continue.

The human resources department activities are part of the

acquisition and payment processes.

An online information system that focuses on leveraging the data for information (rather than processing transactions) is considered what type of system?

an online analytics processing system (OLAP)

Internal controls...

are customized to fit a company's unique risks and risk appetite.

When considering the veracity of data, it is important to watch out for confirmation bias. An example of confirmation bias is

asking advice only from people who share our world view.

Accounting professionals are uniquely qualified to work in risk management due to their training in ___________________, risk identification, and _____________________________.

business processes and holistic business operations

A Field is a group of ____________.

bytes

Artificial intelligence is...

comprised of complex algorithms programmed to mimic human cognitive functions to learn and solve a problem independently.

RPA uses _________________________, in the form of "IF THIS THEN THAT", to pre-program "rules", or decisions, into software.

conditional statements

Which statement concerning data is true?

data is not useful to a business until transformed into information.

Data in its raw format, before it is cleaned, aggregated, or filtered, is stored in a

data lake.

A swim lane within a flowchart provides clarity and accountability for the activities that belong to specific _____ or ________.

employees, departments

Robotic process automation

follows pre-programmed "rules".

Visualization is best defined as...

graphical representations of information and data.

Select from the following list the best definition of strategic risk:

is the risk that comes from a strategy becoming less effective.

Sam audits the internal controls of Arias Corporation and finds that Arias lacks a robust firewall to prevent unauthorized access to their computer network. Sam recommends that Arias research and implement a more robust firewall as a...

preventive control.

The unique ID for a table is the

primary key.

Queries are...

requests for data stored within a database.

An advantage that object-oriented databases have over relational databases are...

the ability to store both structured and unstructured data.

With respect to risk, impact is best defined as:

the estimation of damage that could be caused if the risk occurs.

Accounting communicates to stakeholders...

the financial outcomes of operating, investing, and financing activities.

The value of data is best defined as

the usefulness of the data.