Final exam Flashcards
(117 cards)
0
Q
There are six characteristics that make information both useful and meaningful. If information is free from error or bias and accurately represents the events or activities of the organization, it is representative of the characteristic of?
A
Reliability
1
Q
An AIS must be able to perform which of the following tasks?
A
Collect transaction data
Provide adequate controls
Process transaction data
ALL OF THE ABOVE
2
Q
Transactions can be summarized n a high level as “give-get” transactions. A example of give-get in the expenditure cycle would be?
A
Give cash, get goods
3
Q
Which documentation tool listed below provides a graphical description of the sources and destinations of data as well as dT flow within the organization and the process that transform and store at data?
A
Data flow diagram
4
Q
All of the information (name,GPA, major, etc.) about a particular student is stored in the same?
A
Record
5
Q
The Sarbanes-Oxley Act requires the client’s external auditors to:
A
understand a client’s system of IC’s
6
Q
A flowchart is:
A
an analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner
7
Q
A well-designed AIS can improve the decision-making function within the organization. Which statement below would describe a limitation, rather than a benefit of, an efficient AIS?
A
an AIS provides to its users an abundance of information without any filtering or condensing of such information
8
Q
In transaction processing, generally which activity comes first?
A
capturing data on source documents
9
Q
An audit trail:
A
provides the means to check the accuracy and validity of ledger postings
10
Q
Data flow diagrams depict:
A
processes, but not who is performing the processes
11
Q
Long explanation… Awarding bonuses to subsidiary managers based on ROI could result in:
A
goal conflict
12
Q
Which of the following characteristics of useful information is absent in the situation described above?
A
Timely
13
Q
Which statement below regarding the AIS and managerial reports is false?
A
The AIS is best utilized for financial data while the management is best used for operational data
14
Q
Pay off mortgage on factory:
A
financing cycle
15
Q
Sell concert tickets:
A
revenue cycle
16
Q
Hire a new assistant controller:
A
Human resources/payroll cycle
17
Q
Pay for raw materials:
A
expenditure cycle
18
Q
Decide how many units to make next month:
A
Production cycle
19
Q
Collect payment on customer accounts:
A
revenue cycle
20
Q
Which of the following characteristics of useful information is absent in the situation described above?
A
reliable
21
Q
Which of the following actions would be stored as a record in a transaction file?
A
record production variances
22
Q
Which of the following is a function of an AIS?
A
Transforming data into useful information
23
Q
A chart of accounts:
A
Is a list of the numbers and letters assigned to each general ledger account
24
A document flowchart is particularly useful:
in analyzing the adequacy of control procedures
25
Which of the following is not an element of data processing?:
Reconcile
26
An entity is something about which information is stored. What is the term for the characteristics of interest that are stored about an entity?:
Attribute
27
Briefly, define the terms “data” and “information” in the context of AIS and describe the difference between the two.
data are facts that are recorded and stored. Information is processed data used in decision making.
28
Briefly, define the term “system” in the context of AIS.
System is a set of two or more interrelated components interacting to achieve a goal.
29
What is ERP and what are two advantages and two disadvantages?
ERP is Enterprise Resource Planning. It integrates an organization's information into one overall AIS. Advantages: Data is captured once, Better access controls. Disadvantages: Cost, Time-consuming to integrate.
30
“Ontology,” “Semantics,” and “Syntax”-define and describe how terms relate to systems documentation techniques.
Ontology - The classification of accounting systems. Semantics - The study of meaning. Syntax - The study of the construction of a language.
31
When a customer places an order for a certain product, what should be done before the order is checked for inventory availability?
Customer’s available credit
32
Which document should always be included with a merchandise shipment to a customer?
Packing slip
33
What must be in place and functioning well for an ERP to fully realize benefits?
Adequate controls
34
This document is a legal contract that defines responsibilities for goods in transit?
Bill of Lading
35
Which scenario poses an internal control problem?
Sales representatives have the authority to increase customer’s credit limit in $1000 increments
36
In a revenue cycle with proper controls the ________ who reports to the _________ is not involved in any cash handling activities.
Accounts Receivable Clerks, Controller
37
What is a turnaround document?
A turnaround document contains records of company data and is sent to an external party and then returned to the system as input. Example: Utility Bill
38
What is the least affective control to prevent ordering goods above the market price?
Variance analysis of actual expenses to budgeted expenses
39
In an EOQ, what is the cost associated with holding inventory?
Carrying cost
40
What is the Reverse Auction Technique?
Suppliers compete with one another to meet demand at the lowest price. They are probably best suited for the purchase of commodity items rather than critical components.
41
MRP will be the preferred method over JIT when?
Demand for inventory is fairly predictable
42
Disbursement voucher and supporting documents are sent to?
Cashier
43
In the expenditure cycle, who has the Authorization function, recording function and cash handling function?
Purchasing, Accounts Payable, Cashier
44
What is not shown on a receiving report?
The Price of items
45
Information about financing and investing activities are provided by?
Treasurer
46
Budgets and performance reports should be developed on the basis of?
Responsibility Accounting
47
Which is not a common control for ensuring inventory is secure and counts are accurate?
Sending “blind” copies of the purchase order to inventory control for data
48
Which best mitigates the threat of paying an invoice twice?
Never authorize the payment of a photocopied invoice
49
Which best prevents the acceptance of unordered goods?
Match the packing slip to the purchase order before accepting delivery
50
What are journal vouchers?
A form used to document one or more journal entries such as those made to update the general ledger
51
Know threats and controls for loss of assets in revenue cycle.
Threat – Inventory theft, Controls – Restrict physical access, document all inventory transfers, Bar Code/RFID chips, Periodic inventory counts. Threat – Shipping errors, Controls – Reconcile documents before shipping, Bar code/RFID chips, Data entry controls, ERP system controls against duplicates
52
What is the open invoice method?
Method for maintaining accounts receivable in which customers typically pay according to each invoice
53
What are adjusting journal entries most used for?
Reevaluating estimates
54
What is a threat of the sales order entry for the revenue cycle?
Uncollectible accounts
55
What are some steps to reduce inventory theft?
Restrict physical access, document all inventory transfers, Bar Code/RFID chips, Periodic inventory counts
56
What are some controls for mitigating risks of posting errors?
Data entry controls, Reconcile the sub-ledger with the general ledger
57
What is closed loop verification?
An input validation method that uses data entered into the system to retrieve and display other related information so the accuracy of the input data can be verified
58
What is the problem with kickbacks?
Kickbacks impair the purchasing agent’s ability to purchase the best available products.
59
Which method is used to mitigate the risk of ordering inferior products?
Purchase from approved suppliers, Approve purchases from new suppliers, Hold purchase managers accountable, Monitor quality by suppliers
60
Ordering unnecessary items can result from?
Supervisor’s not reviewing and approving purchase requisitions that individual employees initiate
61
Which technique is used to minimize the risk of an inaccurate inventory count?
Document inventory transfers, Do not inform receiving about quantity
62
Know what an imprest petty cash fund is.
An imprest fund is a cash account with two characteristics, 1) it is set at a fixed amount, and 2) vouchers are required for every disbursement
63
What is the best method for reducing risk of theft?
Document all inventory transfers, Periodic inventory counts, segregation of duties between physical handling and recording of entries
64
XBRL information
The XBRL file containing the tagged data that is delivered to users is called an instance document. The instance document contains facts about specific financial statement line items. Each specific data item in a XBRL document is called an element.
65
What does not make bar graphs easier to read?
Something about using greyish colors
66
What are processing controls?
Controls that ensure that all transactions are processed accurately and completely and that all files and records are properly updated
67
What is a balanced scorecard?
A management report that measures four dimensions of performance: financial, internal operations, innovation and learning, and customer perspectives of the organization
68
What are XBLR basic attributes
The XBRL file containing the tagged data that is delivered to users is called an instance document. The instance document contains facts about specific financial statement line items. Each specific data item in a XBRL document is called an element.
69
MRP
An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs
70
Debit Memo
A document used to record a reduction to the balance due to a vendor
71
Credit Memo
A document authorizing the billing department to credit a customer’s account.
72
Back Order
A document authorizing the purchase or production of items that is created when there is insufficient inventory to meet customer’s orders.
73
Cycle Billing
Producing monthly statements for subsets of customers at different times.
74
JIT Inventory System
A system that minimizes or virtually eliminates manufacturing inventories by scheduling inventory deliveries at the precise times and locations needed
75
Picking Ticket
A document authorizing the inventory control function to release merchandise to the shipping department.
76
Voucher Package
The set of documents used to authorize payment to a vendor. It consists of a purchase order, receiving report, and vendor invoice
77
Credit Limit
The maximum allowable credit account balance for each customer, based on past credit history and ability to pay
78
Remittance Advice
An enclosure included with a customer’s payment that indicates the invoices, statements, or other items paid
79
Purchase Requisition
A document or electronic form that identifies the requisitioner; specifies the delivery location and the date needed; identifies the item numbers, descriptions, quantity, and price of each item requested; and may suggest a vendor
80
Disbursement Voucher
A document that identifies the vendor, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances
81
Threat - Orders later repudiated by customers who deny placing them
Controls - Digital or written signatures
82
Threat - Theft of inventory by employees
Controls - Restrict physical access, document all inventory transfers, periodic inventory count, Bar code/RFID
83
Threat - Paying the same invoice twice
Controls - Requiring a complete voucher package for all payments, policy to pay from only original copies of supplier invoices, cancelling all supporting documents when payment is made
84
Threat - Recording and posting errors in accounts payable
Controls - Data entry edit controls, Reconciliation of detailed accounts payable records with the general ledger control account
85
Threat - Failing to take available purchase discounts for prompt payment
Controls - Filing of invoices by due date for discounts, cash flow budgets
86
Threat - Kickbacks
Controls - Requiring purchasing agents to disclose financial and personal interests in suppliers, training employees in how to respond to offers of gifts from suppliers, job rotation and mandatory vacations, supplier audits
87
Threat - Mistakes in shipping orders to customers
Controls - Reconciliation of shipping documents with sales orders, picking lists, and packing slips. Bar codes/RFID chips. Data entry edit controls. Configuration of ERP system to prevent duplicate shipments
88
Threat - Errors in customer invoices
Controls - Verification of invoice accuracy
89
A simple method for catching many types of employee fraud is
Require Vacations
90
Most fraud perpetrators are insiders because
Insiders know more about the system and it’s weakness than do outsiders
91
Spyware is
Software that monitors computing habits and sends the data to someone else
92
The excuses perpetrators use to justify their actions is
Rationalization
93
Which of the following is an opportunity for employee fraud to occur?
Close assumption with suppliers or customers
94
If the question talks about movie tickets and fraud, the answer is
Some customers presented tickets that were purchased on the previous day (some tickets were torn)
95
According to the ERM, these deal with effectiveness and efficiency of company operations, such as performance and profitability
Operations Objectives
96
An audit committee is responsible for
All of the Above
97
Which of the following is not a risk in the COSO Event Risk Management Framework?
Monitoring
98
The possibility that a material error occur even through the auditors are following audit procedures and using good judgment is
Detection Risk
99
The purpose of _________is to determine why, how, where, and who will perform the audit
Audit Planning
100
Which of the following is not an example of the Fraud Triangle concerning with easing fraudsters conscience?
Revenge against the company
101
Illegally obtaining and using another person’s confidential information for economic gain is
Identify Theft
102
An audit committee of board of directors
Provides a check and balance on management
103
If a question tells you about a scenario in which a tape was lost but things turned out ok, the answer is
The Tape was encrypted and password protected
104
When control deficiency is identified, the author should inquire about
Compensation Controls
105
Why is computer fraud harder to detect than other fraud?
Computer fraud may leave little or no evidence
106
Which is true?
COSO framework has been widely accepted as authority of internal controls
107
All other things being equal, which is true?
Preventive controls are superior to detective controls
108
If a question asks you about which statement concerning control environment is false, the answer is
Management attitudes toward internal controls have little impact...
109
a review of general controls with a focus….
Information systems audit
110
What is the 5 step approach to internal control evaluation that provides a logical framework for carrying out an audit?
Risk Based Approach to Auditing
111
What are the 3 C’s?
Commit, Conceal, and Convert
112
Know segregation of duties
Authorization, recording, Custody
113
Know the 4 stages of the auditing process
Planning, Collecting, Evaluating, Communicating
114
What is the main reason why CFO’s commit fraud?
Because they feel pressured
115
What is the biggest red flag in catching perpetrators?
Living beyond their means
116
Describe how the video that dealt with people giving a person a shock just because the “man in authority” said it was important relates to fraud
The people kept going because they were told by a person that was high in rank, so they listened
