BUS 319 Final

A disaster recovery plan is a comprehensive statement of all actions to be taken before a disaster (T/F)

False

Cloud computing is a practice in which the organization sells its IT resources to a third-party outsourcing vendor then leases it back IT services from the vendor for a contract period (T/F)

False

Collusion among employees in the commission of a fraud is difficult to prevent but easy to detect (T/F)

False

Custom software is completely finished, tested, and ready for implementation (T/F)

False

Information lacking reliability may still have value (T/F)

False

It is harder to resolve tax-refund fraud when a deceased person's information is used (T/F)

False

It is important to perform credit checks on customers on every sales order (T/F)

False

Retrieval is the task of permanently removing obsolete or redundant records from the database (T/F)

False

Substantive testing techniques provide information about the accuracy and completeness of an application's processes (T/F)

False

The Sarbanes-Oxley Act requires only that a firm keep good records (T/F)

False

The fraud triangle represents a geographic area in Southeastern Asia where international fraud is prevelant (T/F)

False

The general journal is used to record recurring transactions that are similar in nature (T/F)

False

The primary key represents the name of the data file to be processed (T/F)

False

The two types of ledgers are the general ledger and the journal ledger (T/F)

False

System flowcharts represent the input sources, processes, and output products of a computer system (T/F)

False- this describes a data flow diagram

A comparison of transaction details between the purchase order, the receiving report, and the invoice is called a three-way match (T/F)

True

A remittance advice is a form of turn-around document (T/F)

True

Auditors may prepare flowcharts to verify the correctness of program logic (T/F)

True

Buying inventory from preauthorized vendors helps to deter purchasing agents from buying inventories at excessive costs and receiving kickbacks, or buying inventory from family and friends (T/F)

True

Computer programs are intellectual property (T/F)

True

Employees should be made aware of the firm's commitment to ethics (T/F)

True

External auditors can cooperate with and use evidence gathered by internal audit departments that are organizationally independent and that report to the audit committee of the board of directors (T/F)

True

IT general controls are so named because they are not application-specific, but rather apply to all systems (T/F)

True

In point of sale systems, authorization takes the form of online validation of checks, debit and credit card charges (T/F)

True

Integrated accounting systems (advanced technology) automatically transfer data between modules (T/F)

True

Processing more transactions at a lower unit cost makes batch processing more efficient than real-time systems (T/F)

True

Role based access control is an effective method of providing multi-level security (T/F)

True

Small and medium sized businesses are more frequent targets of corporate account takeover fraud schemes (T/F)

True

The database administrator is responsible for the security and integrity of the database (T/F)

True

The most common access point for perpetrating computer fraud is at the data collection stage (T/F)

True

The same internal control objectives apply to manual and computer-based information systems (T/F)

True

Under SOX legislation public accounting firms are no longer allowed to provide consulting services to audit clients (T/F)

True

When customer payments are received, the mail room clerk sends the checks to the cash receipts clerk and the remittance advice to the AR clerk (T/F)

True

Which of the following best describes lapping? a. applying cash receipts to a different customer's account in an attempt to conceal previous thefts of funds b. inflating bank balances by transferring money among different bank accounts c. expensing an asset that has been stolen d. creating a false transaction

a. applying cash receipts to a different customer's account in an attempt to conceal previous thefts of funds

The order of the entries made in the general journal is by: a. date b. account number c. user d. customer number

a. date

Which of the following risks does the auditor least control? a. inherent risk b. control risk c. detection risk d. all are equally controllable

a. inherent risk

The purpose of the purchase order is to a. order goods from vendors b. record receipt of goods from vendors c. authorize the purchasing department to order goods d. approve payment for goods received

a. order goods from vendors

When certain customers made cash payments to reduce their accounts receivable, the bookkeeper embezzled the cash and wrote off the accounts as uncollectible. Which control procedure would most likely prevent this irregularity? a. segregation of duties b. accounting records c. accounting system d. access controls

a. segregation of duties

Segregation of duties in the computer-based information system includes a. separating the programmer from the computer operator b. preventing management override c. separating the inventory process from the billing process d. performing independent verifications by the computer operator

a. separating the programmer from the computer operator

When the goods are received and the receiving report has been prepared, which ledger may be updated? a. standard cost inventory ledger b. inventory subsidiary ledger c. general ledger d. accounts payable subsidiary ledger

a. standard cost inventory ledger

An example of a financial transaction is: a. the purchase of a computer b. a supplier's price list c. a delivery schedule d. an employee benefit brochure

a. the purchase of a computer

Statistically, which of the following scenarios should an auditor be most skeptical about as a potential warning sign of fraud? a. A sales representative who drives a sports car, takes exotic vacations, and otherwise exhibits a lifestyle that exceeds his known means b. An accounts payable clerk who has an unusually close relationship with the representative at one of the company's biggest customers c. A marketing executive who is struggling with a prescription drug addiction d. A warehouse foreman who is experiencing serious family problems

b. An accounts payable clerk who has an unusually close relationship with the representative at one of the company's biggest customers

Which of the following is NOT a requirement in management's report on the effectiveness of internal controls over financial reporting? a. A statement of management's responsibility for establishing and maintaining adequate internal control user satisfaction b. a statement that the organization's internal auditors have issued an attestation report on management's assessment of the company's internal controls c. a statement identifying the framework management uses to conduct its assessment of internal controls d. an explicit written conclusion as to the effectiveness of internal control over financial reporting

b. a statement that the organization's internal auditors have issued an attestation report on management's assessment of the company's internal controls

Which department is least likely to be involved in the revenue cycle? a. credit b. accounts payable c. billing d. shipping

b. accounts payable

All of the following are recommended features of a fire protection system for a computer center except a. clearly marked exits b. an elaborate water sprinkler system c. manual fire extinguishers in strategic locations d. automatic and manual alarms in strategic locations

b. an elaborate water sprinkler system

Which duties should be segregated? a. matching purchase requisitions, receiving reports, and invoices, and authorizing payment b. authorizing payment and maintaining the check register c. writing checks and maintaining the check register d. authorizing payment and maintaining the accounts payable subsidiary ledger

b. authorizing payment and maintaining the check register

Which document helps to ensure that the receiving clerks actually count the number of goods received? a. packing list b. blind copy of purchase order c. shipping invoice d. invoice

b. blind copy of purchase order

Which of the following is NOT a task performed in the audit planning phase? a. reviewing an organization's policies and practices b. determining the degree of reliance on controls c. reviewing general controls d. planning substantive testing procedures

b. determining the degree of reliance on controls

Computer accounting control procedures are referred to as general or application controls. The primary objective of application controls in a computer environment is to a. ensure that the computer system operates efficiently b. ensure the validity, completeness, and accuracy of financial transactions c. provide controls over the electronic functioning of the hardware d. plan for the protection of the facilities and backup for the systems

b. ensure the validity, completeness, and accuracy of financial transactions

The purpose of the receiving report is a. order goods from vendors b. record receipt of goods from vendors c. authorize the purchasing department to order goods d. bill for goods delivered

b. record receipt of goods from vendors

Customers should be billed for back-orders when a. the customer purchase order is received b. the backordered goods are shipped c. the original goods are shipped d. customers are not billed for backorders because a backorder is a lost sale

b. the backordered goods are shipped

Computer fraud refers to using hardware and software to divert or acquire the assets of the firm. Its activities include all of the following except" a. the theft, misuse, or misappropriation of assets by altering computer records and files b. the theft, misuse, or misappropriation of physical assets of the firm the theft, misuse, or misappropriation of assets by altering the logic of computer software c. the theft, misuse, or misappropriation, of assets by altering the logic of computer software d. the theft or illegal use of computer records and files

b. the theft, misuse, or misappropriation of physical assets of the firm

Adequate backups will protect against all of the following except a. natural disasters such as fires b. unauthorized access c. data corruption caused by program errors d. system crashes

b. unauthorized access

Which of the following is NOT an implication of section 302 of the Sarbanes-Oxley Act? a. Auditors must determine, whether changes in an internal control has, or is likely to, materially affect internal control over financial reporting b. Auditors must interview management regarding significant changes in the design or operation of internal control that occurred since the last audit c. Corporate management (including the CEO) must certify monthly and annually their organization's internal controls over financial reporting d. Management must disclose any material changes in the company's internal controls that have occurred during the most recent fiscal quarter

c. Corporate management (including the CEO) must certify monthly and annually their organization's internal controls over financial reporting

Lorenzo is auditing Tin Roof Inc.'s contract revenue, an area in which the risk of fraud has been assessed as high. Which of the following pieces of the audit evidence is the most reliable? a. Contract invoices obtained by Lorenzo from Tin Roof's accounting department b. Contract terms obtained by Lorenzo from the other party to the contract c. Purchase orders from the other party to the contract obtained by Tin roof's controller d. Photocopies of contract labor records obtained by Lorenzo from Tin Roof's payroll processing provider

c. Purchase orders from the other party to the contract obtained by Tin roof's controller

Which document is not a type of source document? a. sales order b. an employee time card c. a paycheck d. a sales return receipt

c. a paycheck

Which of the following tasks should the cash disbursements clerk NOT perform? a. review the supporting documents for completeness and accuracy b. prepare checks c. approve the liability d. mark the supporting documents paid

c. approve the liability

The purpose of the purchase requisition is to a. order goods from the vendor b. record receipt of goods from vendors c. authorize the purchasing department to order goods d. bill for goods delivered

c. authorize the purchasing department to order goods

The purpose of the sales invoice is to a. record reduction of inventory b. transfer goods from seller to shipper c. bill the customer d. select items from inventory for shipment

c. bill the customer

Business ethics involves a. how manager's decide on what is right in conducting business b. how managers achieve what they decide is right for the business c. both a and b d. none of the above

c. both a and b

Which of the following is true about cash disbursement? a. the cash disbursement function is part of account payable b. cash disbursements is an independent accounting function c. cash disbursements is a treasury function d. the cash disbursement function is part of the general ledger department

c. cash disbursements is a treasury function

Who is responsible for establishing and maintaining the internal control system? a. the internal auditor b. the accountant c. management d. the external auditor

c. management

The importance of the accounting profession of the Sarbanes-Oxley Act is that a. bribery will be eliminated b. management will not override the company's internal controls c. management are required to certify their internal control system d. firms will not be exposed to lawsuits

c. management are required to certify their internal control system

All of the following are factors in the fraud triangle except a. ethical behavior of an individual b. pressure exerted on an individual at home and job related c. materiality of the assets d. opportunity to gain access to assets

c. materiality of the assets

Which task still (typically) requires human intervention in an integrated purchase/cash disbursements system? a. determination of inventory requirements b. preparation of purchase order c. preparation of receiving report d. preparation of a check register

c. preparation of receiving report

The accounts receivable clerk destroys all invoices for sales made to members of her family and does not record the sale in the accounts receivable subsidiary ledger. Which procedure will not detect this fraud? a. prenumber and sequence the check all invoices b. reconcile the accounts receivable control to the accounts receivable subsidiary ledger c. prepare monthly customer statements d. reconcile total sales on account to the debits in the accounts receivable subsidiary ledger

c. prepare monthly customer statements

Which system is not part of the expenditure cycle? a. cash disbursements b. payroll c. production planning/control d. purchases/accounts payable

c. production planning/control

In a computerized environment, a list of authorized suppliers would be found in the: a. master file b. transaction file c. reference file d. archive file

c. reference file

The open purchase order file in the purchasing department is used to determine a. the quality of items a vendor ships b. the best vendor for a specific item c. the orders that have not been received d. the quantity of items received

c. the orders that have not been received

According to the AICPA whitepaper, the top five cybercrimes include all of the following except: a. identity theft b. corporate account takeover c. theft of email addresses d. tax-refund fraud

c. theft of email addresses

Advantages of cloud computing include all of the following except: a. access to whatever computing power is needed b. paying only for what is used c. unknown processing location d. flexible, short tern contracts

c. unknown processing location

Examples of application controls include all of the following except: a. A cash disbursements batch-balancing routine that verifies that the total payments to vendors reconciles with the total postings to the accounts payable subsidiary ledger b. An account receivable check digits procedure that validates customer account numbers on sales transactions c. A payroll system limit check that identifies employee time card records with reported hours worked in excess of the predetermined normal limit d. A reconciliation procedure whereby the billing department verifies the warehouse receiving log to the invoice from the vendor

d. A reconciliation procedure whereby the billing department verifies the warehouse receiving log to the invoice from the vendor

Which of the following statements is true? a. Both the SEC and the PCAOB require the use of the COSO framework b. Both the SEC and the PCAOB require the COBIT framework c. The SEC recommends COBIT, and the PCAOB recommends COSO d. Any framework can be used that encompasses all of COSO's general themes e. Both c and d are true

d. Any framework can be used that encompasses all of COSO's general themes

Which statement is NOT correct for an expenditure system with proper internal controls? a. Cash disbursements maintain the check register b. accounts payable maintains the accounts payable subsidiary ledger c. accounts payable is responsible for paying invoices d. accounts payable is responsible for authorizing invoices

d. accounts payable is responsible for authorizing invoices

Which of the following is not a business resource? a. raw material b. labor c. information d. all are business resources

d. all are business resources

Goods received are inspected and conducted to a. determine that the goods are in good condition b. determine the quantity of goods received c. preclude payment for goods not received or received in poor condition d. all of the above

d. all of the above

Which of the following controls directly contribute to the security of the computer center environment? a. construction controls b. Air conditioning controls c. access controls d. all of the above

d. all of the above

In a computer-based information system, which of the following duties need to be separated? a. program coding from program operations b. program operations from program maintenance c. program maintenance from program coding d. all of the above duties should be separated

d. all of the above duties should be separated

Which one of the following departments does not receive a copy of the purchase order? a. purchasing department b. receiving department c. accounts payable d. general ledger

d. general ledger

In contrast to a batch processing system, in a real-time system: a. a lag occurs between the time of the economic event and when the transaction is recorded b. relatively fewer hardware, programming, and training resources are required c. a lesser resource commitment per unit of output is required d. processing takes place when the economic event occurs

d. processing takes place when the economic event occurs

Which documents would an auditor most likely choose to examine closely to ascertain that all expenditures incurred during the accounting period have been recorded as a liability? a. invoices b. purchase orders c. purchase requisitions d. receiving reports

d. receiving reports

The type of transaction most suitable for real-time processing is a. recording fixed asset purchase b. recording interest earned on long-term bonds c. adjusting prepaid insurance d. recording a sale on account

d. recording a sale on account

When purchasing inventory, which document usually triggers the recording of a liability? a. purchase requisition b. purchase order c. receiving report d. supplier's invoice

d. supplier's invoice

In a computerized system that uses an economic order quantity (EOQ) model and the perpetual inventory method, who determines when to reorder inventory? a. the inventory control clerk b. the purchasing department c. the vendor d. the computer system

d. the computer system

Which type of control: counting inventory

detective

Which type of control: preparing a bank reconciliation

detective

Which type of control: preparing a trial balance

detective

An example of identity theft's malicious purposes is: a. to open a line of credit with a bank b. to buy a house or rent an apartment c. to receive medical care d. to obtain employment e. all of the above

e. all of the above

Which type of control: authorizing a credit sale

preventitive

Which type of control: locking the warehouse

preventitive

Which type of control: segregation of duties

preventitive