Accounting information systems final

Which document triggers the revenue cycle?

the customer purchase order

In a firm with proper segregation of duties, adequate supervision as a compensating control is still necessary in (most risk)

receiving

An important reconciliation in the payroll system is

general ledger compares the labor distribution summary from cost accounting to the disbursement voucher from accounts payable.

Which report is an output of the financial reporting system (FRS)?

comparative balance sheet

Which item reflects vital information such as quantities and unit prices?

Sales order (sales)

What contributes to the success of the electronic data interchange system? (data implemented in the system)

Implementation of agreements

What is an example of a payroll system information technology (IT) control? (technology based security)

Direct deposit (automated)

Which department is responsible for receiving the supplier's invoice, the purchase order, and the receiving report in order to post the acquisition of fixed assets?

Accounts Payable

Why is a management reporting system a control? (reporting = monitor)

A management reporting system contains data that can be used to monitor the company.

Which comparison serves as a tool for managers by using data from the budget master file and from the responsibility center file?

A comparison of budgets to actual amounts and review of the variance

Which journals record the results of transaction cycles? Results = summarized

Special journals and subsidiary accounts of the general ledger

A description of the physical arrangement of records in the database is (datebase = internal)

the internal view.

A data mart is

a data warehouse created for a single function or department.

Which of the following is one of the core ERP applications? (enterprise resource planning)

Distribution

The objective of an ERP is (everyone reads the same page)

to integrate key processes of the organization, such as order entry, manufacturing, procurement and accounts payable, payroll, and human resources.

What describes encryption? (to encrypt a code you must converse the data

Conversion of data into a secret code

What can be used to assess the adequacy of a client's access controls?

Penetration testing

Special-purpose systems

target selected segments of the economy.

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.

The systems development process constitutes

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

An accountant’s responsibility during the implementation of the system is

to represent the interests of the accounting and finance department.

Documentation standards are set

by the accountant on the project team.

End users are

those for whom the system is built.

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

Backup of programs

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

segregation of duties

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

accounting records

Tests of controls include

completing questionnaires.

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.

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

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

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

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

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.

What represents an equipment failure risk in a communication system?

A loss of databases stored on network servers

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

Validity test

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.

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.

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.

Which trait is associated with an antiviral program?

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

What is an example of a password standard?

Expiration interval

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

The operating system must be protected from itself.

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

Recording all transactions

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

For reconciliation purposes

Who reconciles simulation output with production data?

Auditor

What is used in a test of credit approvals?

Sales amount

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