D217 Accounting Information Systems

Transaction:

is an event that affects or is of interest to the organization and is processed by its information system as a unit of work.

Financial transaction

an economic event that affects he assets and equities of the organization, is reflected in its accounts and is measured in monetary terms.

IS(Information Systems)

AIS(Accounting Information System) and

MIS(Management Information System)

AIS(Accounting Information System

GL/FRS (General Ledger/Financial Reporting System)

TPS (Transaction Processing System)

MRS (Management Reporting System)

MIS (Management Information System

Financial Management System

Marketing System

Distribution System

Human Resource System

TPS (Transaction Processing System

Expenditure Cycle

Conversion Cycle

Revenue Cycle

Expenditure Cycle

Purchasing System

Cash Disbursement System

Payroll Processing System

Fixed Asset System

Conversion Cycle

Cost Accounting System

Producton Planning and Control System

Revenue Cycle

Sale Processing System

Cash Receipts System

U6TB 14

What is used in a test of credit approvals?

Sales amount

U6TB 13

Who reconciles simulation output with production data?

Auditor

U6TB 12

Why does a simulated application reprocess transactions that a production application previously processed?

For reconciliation purposes

U6TB 11

Which test is used to determine that an application creates an adequate audit trail?

Recording all transactions

U6TB 10

Which control objective ensures that no module should be allowed to destroy or corrupt another module?

The operating system must be protected from itself.

U6TB 9

What is an example of a password standard?

Expiration interval

U6TB 8

Which trait is associated with an antiviral program?

The program is a safeguard for mainframes, networks, and personal computers.

U6TB 7

Why should the systems development function be separated into two independent groups: new systems development and systems maintenance?

To improve systems documentation

U6TB 6

What is the role of management regarding the effectiveness of internal controls over financial reporting, according to the Sarbanes-Oxley Act (SOX)?

Assess their effectiveness

U6TB 5

After completing the annual audit for a publicly traded company, an external auditor issues a qualified opinion about the effectiveness of internal controls.What is the implication of this finding?

The auditor identified at least one material weakness in internal controls.

U6TB 4

According to the Sarbanes-Oxley Act (SOX), what is management's responsibility regarding controls designed to prevent and detect fraud that could lead to financial statements being materially misstated?

Management is responsible for implementing controls.

U6TB 3

What is a limitation of the preventive-detective-corrective (PDC) control model?

Lacks practical guidance

U6TB 2

Which internal control is primarily supported by a manager's review of a checklist after a task has been completed?

Measure compliance with an organization's prescribed policies and procedures

U6TB 1

Which component of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework is being considered when an auditor is reviewing a walk-through and process narrative of an established process and decides to gain an understanding of the process by tracing a single transaction from the source documents through the accounting information system to the financial statements?

Information and communication

U6TA 14

Which scenario accurately represents the general approach used to test application controls for a batch processing application?

Auditor-created data are submitted in a transaction file.

U6TA 13

Why is an accumulator routine used in a banking application?

To address rounding errors

U6TA 12

Which characteristic applies to black box testing?

It is used for inputs and outputs that are easily reconciled.

U6TA 11

Which information technology (IT) test category verifies that credit checks and accounts payable (AP) three-way matches are performed by an application?

Validity test

U6TA 10

What represents an equipment failure risk in a communication system?

A loss of databases stored on network servers

U6TA 9

What are two general forms of risk related to the technology of network communications?

Subversive threats and equipment failures

U6TA 8

What is a common form of contra-security behavior?

Post-it syndrome

U6TA 7

Management is required to provide external auditors with documented evidence of functioning controls related to selected material accounts in a report on control effectiveness.How is this evidence obtained?

The internal audit department documents this evidence.

U6TA 6

According to the Public Company Accounting Oversight Board (PCAOB) Standard No. 5, auditors need to understand transaction flows, including the controls pertaining to how transactions are initiated, authorized, recorded, and reported. Which accounts are affected by this requirement?

All financial accounts with material implications for financial reporting

U6TA 5

Which access point is the most common for committing computer fraud?

Data collection

U6TA 4

A disgruntled employee places a logic bomb to erase an organization's supplier list.Which type of fraud does this scenario reflect?

Database management fraud

U6TA 3

What is one of the four areas that ethical issues in business can be divided into?

Honesty

U6TA 2

Which component of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework is being considered when an auditor is comparing a company's organization chart to the prior year's chart to identify new personnel who are responsible for internal controls?

Risk assessment

U6TA 1

An organization's internal controls have been deemed effective by management and external audits for the last five years. A proposal is made to upgrade the enterprise resource planning (ERP) system at a significant cost. The proposal mentions slightly increased IT controls to better detect errors. Which modifying assumption would keep management from implementing the upgrade?

Reasonable assurance

M14Q 5

Parallel simulation

is used to reprocess the same transactions that the production application previously processed.

M14Q 4

Which of the following is an advantage of the test data technique?

The test data technique requires extensive computer expertise on the part of the auditor.

M14Q 3

Testing the three-way match involves

creating two master files.

M14Q 2

Access tests

verify that individuals or programs are valid.

M14Q 1

Which of the following is true about the black box approach to auditing computer applications?

The application does not need to be removed from service and tested directly.

M13Q 5

The most common method of password control is

the reusable password.

M13Q 4

Which of the following is considered an intentional threat to the integrity of the operating system?

individuals who browse the operating system to identify and exploit security flaws

M13Q 3

Which of the following is considered an unintentional threat to the integrity of the operating system?

a hardware flaw that causes the system to crash

M13Q 2

The operating system is

the computer's control program.

M13Q 1

Operating system control objectives may not be achieved

because of flaws in the operating system that are exploited either accidentally or intentionally.

M12Q 5

Systems development is separated from data processing activities because failure to do so

allows programmers access to make unauthorized changes to applications during execution.

M12Q 4

Segregation of duties in the computer-based information system includes

separating the programmer from the computer operator.

M12Q 3

Which is the most critical segregation of duties in the centralized IT function?

systems development from computer operations

M12Q 2

Control risk is

the likelihood that the control structure is flawed because controls are either absent or inadequate to prevent or detect errors in the accounts.

M12Q 1

Tests of controls include

completing questionnaires.

M11Q 5

An accounting system that maintains an adequate audit trail is implementing which internal control procedure?

accounting records

M11Q 4

A sequential file backup technique is called

grandfather-father-son.

M11Q 3

Which of the following is a part of the COSO framework?

segregation of duties

M11Q 2

Individuals who acquire some level of skill and knowledge in the field of computer ethics are involved in which level of computer ethics?

para computer ethics

M11Q 1

Which ethical principle states that the benefit from a decision must outweigh the risks, and that there is no alternative decision that provides the same or greater benefit with less risk?

proportionality

U5TB 14

What is the multistage process that guides an organization's management through the in-house development or purchase of information systems?

Systems development life cycle (SDLC)

U5TB 13

The applications that emerge from the systems development life cycle (SDLC) must possess controls that are in accordance with the provisions of which Statement on Auditing Standards?

Statement on Auditing Standards No. 109

U5TB 12

A vendor-supported system provides the development and maintenance of database tables for an application.What is being provided when a vendor does this?

Database support

U5TB 11

Which process are planning, authorizing, scheduling, accounting for, and controlling necessary parts of?

Systems development process

U5TB 10

If a firm purchases an accounts payable module, which type of system is it purchasing?

General accounting system

U5TB 9

How does implementation affect the success of a system?

Improper implementation leads to system failure.

U5TB 8

All business processes are examined to identify waste and non-value-added activities and to take steps to eliminate them.Which non-value-added activity can a responsive, user-oriented information system eliminate?

Counting inventory

U5TB 7

Which systems have long implementation timelines?

Custom in-house systems

U5TB 6

What might a vendor-supported system offer?

Backup and recovery of programs and data as part of an organization's disaster recovery plan

U5TB 5

What is a drawback of a backbone system such as an enterprise resource planning (ERP) system?

Large cost

U5TB 4.

Which systems development participants are outside consultants who work with a development team to ensure that the systems development process is properly implemented and controlled?

Stakeholders

U5TB 3

What do stronger application controls translate into?

Lower financial reporting risk

U5TB 2

Which systems often have long development timelines for firms?

Custom in-house systems

U5TB 1

A type of backbone, enterprise resource planning (ERP), offers a vast array of modules for dealing with almost every conceivable business process.What is a major drawback of a system with such extensive customization?

A drawback of extensive customization is expense.

U5TA 14

Who oversees systems development?

An internal steering committee

U5TA 13

Which individuals have an interest in a system but are not formal end users?

Stakeholders

U5TA 12

Which system should be selected if a firm needs to implement software immediately?

Commercial system

U5TA 11

How do accountants provide technical support during the systems development phase?

By choosing the correct depreciation method

U5TA 10

What causes system failures?

System design

U5TA 9

All business processes are examined to identify waste and non-value-added activities and to take steps to eliminate them.Which non-value-added activity can a responsive, user-oriented information system eliminate?

Counting inventory

U5TA 8

What might a vendor-supported system offer?

Backup and recovery of programs and data as part of an organization's disaster recovery plan

U5TA 7

Which type of system would an organization purchase if it is looking for a commercial system that is developed and maintained by a provider?

Vendor-supported system

U5TA 6

What is a characteristic incorporated into a disaster recovery plan of a vendor-supported system?

Backup of programs

U5TA 5

What is a drawback of a backbone system such as an enterprise resource planning (ERP) system?

Large cost

U5TA 4

Which systems development participants are outside consultants who work with a development team to ensure that the systems development process is properly implemented and controlled?

Stakeholders

U5TA 3

What is the outcome of a formal and well-controlled systems development process?

Accounting information systems applications that are free from internal control weaknesses.

U5TA 2

Which systems come with all primary processing modules programmed and are basic system structures on which to build?

Backbone systems

U5TA 1

How are vendors able to reduce the unit cost of general accounting systems to a fraction of in-house development costs?

By mass producing a standard system

M10Q 20

The growth of commercial software development is driven in part by

the trend toward downsizing organizational units and the move toward distributed data processing.

M10Q 19

Special-purpose systems

target selected segments of the economy.

M10Q 18

Backbone systems

provide a basic system structure on which to build.

M10Q 17

General accounting systems

are designed to serve a wide variety of user needs.

M10Q 16

Turnkey systems

are completely finished and tested systems that are ready for implementation.

M10Q 15

The system development process is important to accountants because

they are as concerned about the integrity of this process as they are with any manufacturing process that has financial resource implications.

M10Q 14

The systems development process constitutes

a set of activities by which organizations obtain IT-based information systems.

M10Q 13

The systems development process constitutes a set of activities that are of interest to accountants and auditors because

the quality of accounting information presented in an organization's financial statements is directly related to the quality of the accounting information systems that process and report it.

M10Q 12

Which of the following is true about commercial software?

It can be installed faster than a custom system.

M10Q 11

The prime advantage of in-house development is

the ability to produce applications to exact specifications.

M10Q 10

A key offering for a vendor supported system is

application installation, system configuration, data conversion, personnel training, and trouble shooting and maintenance.

M10Q 9

A commercial software system that is finished, tested, and ready for implementation is called a

turnkey system.

M10Q 8

The systems steering committee

oversees systems development and assigns priorities.

M10Q 7

End users are

those for whom the system is built.

M10Q 6

Statement on Auditing Standards No. 109 requires

the accountant's involvement at both the detailed design and implementation phases.