n application control that compares the amount of an employee’s raise to that employee’s

existing salary is called a(n)

the use of biometrics as part of employee authentication is designed primarily to reduce the risk
of which thre

Inaccurate updating of the master payroll file

b. Errors in processing payroll

d.
Inaccurate time and attendance data
At what step in the audit process do the concepts of reasonable assurance and materiality enter into the
auditor's decision process ?

Select one:

a. planning

b. they are important in all three steps

c. evidence collection

d. evidence evaluation

Which of the following XBRL components contains information about which items should be summed to
create a category total (e.g., which items comprise current liabilities)?

Select one:

a. Schema

b.

Style sheet

c.

Instance document
d.

Linkbase

e.

Taxonomy

Which of the following pairs of duties combines the functions of custody and authorization in a manner
that would allow an employee to conceal the theft of a customer’s payment?

Select one:

a.

Handling cash receipts plus maintaining accounts receivable

b. Handling cash receipts plus issuing credit memos

c. None of the combinations involve the functions of custody and authorization in a manner that would
enable an employee to conceal theft of a customer’s payment

d. All of the combinations involve custody and authorization in a manner that would enable an
employee to conceal theft of a customer’s payment

e. Writing checks plus reconciling the bank statement

Which of the following control procedures is designed to reduce the risk of theft of paychecks or
fraudulent distribution of paychecks?

Select one:

a.
Restriction of access to blank payroll checks

b.

Redepositing all unclaimed paychecks and investigating the reasons why the pay-checks were not
claimed

c. None of the above

d.

All of the statements

e.

Prenumbering and periodically accounting for all paychecks

Which of the following is a computer technique that assists an auditor in understanding program logic
by identifying all occurences of specific variables?

Select one:

a. automated flowcharting

b. scanning routine

c. mapping program

d. program tracing

Which of the following is most likely the cost driver for accounts payable expenses associated with
processing supplier invoices?

Select one:

a. All of the metrics listed

b.
Number of suppliers used

c.

Total price of purchases

d.

Number of purchases made

e.

Number of different parts purchased

The control procedure of cancelling the documents in a voucher package is designed to reduce the risk
of

Select one:

a. fraudulent cash disbursements

b. making duplicate payments

c. failure to take advantage of discounts for prompt payment

d. paying for items not received

e.

theft of inventory

Which of the following is not a known threat to production cycle activities?

Select one:

a. risk of inappropriate allocation of overhead costs

b.

loss or alteration of production data

unauthorized disclosure of production information

d.

risk of inaccurate or invalid master data

Which of the following XBRL components can, if used too much, limit the potential benefits of
comparability across organizations?

Select one:

a.

Taxonomy extensions

b.

Presentation linkbases

c.

Style sheets

d. Schemas

n terms of quality control measures, the costs associated with issuing credit memos to customers who
return defective products is part of .
Select one:

a.

inspection costs

b. none of the above

c.

prevention costs

d.

external failure costs

e.

internal failure costs

Which of the following documents is no longer needed if a company uses the evaluated receipts system
(ERS) with its suppliers?

Select one:

a. Purchase order

b. Receiving report

c. Supplier invoice

d. Debit memo
e. None of the above

The development of an MPS would be most effective in preventing which of the following threats?

Select one:

a. excess production

b.

production of poor-quality goods

c.

loss of inventory

d.

recording and posting errors

Use of a separate checking account for payroll is designed to reduce the risk of the threat of .

Select one:

a.

errors in processing payroll

b. loss or destruction of payroll data

c.

theft or fraudulent disbursement of paychecks

unauthorized changes to the payroll master file

e.

failure to make required payments to government tax agencies

Which of the following combinations of duties can the same employee perform without violating the
principle of segregation of duties?

Select one:

a. All three of the listed combinations can be performed by the same person without violating the
principle of segregation of duties

b. Shipping inventory and billing customers

c. None of the three listed combinations should be performed by the same person because all three
combinations violate the principle of segregation of duties

d. Taking customer orders and checking inventory availability

e.

Issuing credit memos and maintaining accounts receivable

Which of the following procedures is NOT used to detect unauthorized program changes?

Select one:

a. reprocessing

b. parallel simulation

c. reprogramming code

d. source code comparison

Select one:

a.

Errors in processing payroll

b. Untimely payments

c.

Theft or fraudulent distribution of paychecks

d.

Unauthorized changes to payroll master data

Fraudulent financial reporting is a concern in the GL/reporting cycle. The best control to deal with that
potential problem is

Select one:

a.

an independent audit of all adjusting entries

b.

proper segregation of duties

c. prenumbering of all documents

d.

processing integrity controls such as validity checks

requiring mandatory vacations for all managers

Creation and review of an audit trail is a detective control that can enable organizations to find and
correct problems arising from

Select one:

a. neither: unauthorized adjusting entries and inaccurate updating of the general ledger

b.

inaccurate updating of the general ledger

c.

both: unauthorized adjusting entries and inaccurate updating of the general ledger

d.

unauthorized adjusting entries

Which of the following is designed primarily to improve the efficiency of financial reporting?

Select one:

a.

XBRL

b. the balanced scorecard

c.

XML

d.
IFRS

To implement proper segregation of duties, who should have the ability to create new records in the
employee master file used for processing payroll?

Select one:

a.

The new employee’s supervisor

b.

Someone in HR

c.

A payroll clerk

d.

Any of the three people listed above could perform this task

e. None of the three people listed above should perform this task

Which control procedure would be most effective in reducing the risk of over- or-under-production?

Select one:

a.

Reviewing all changes to master data

Computer-integrated manufacturing

c. Reports that highlight the components of throughput

d.

Activity-based costing

e.

Production planning systems

Which of the following types of fraud requires access to the accounts receivable master file?

Select one:

a. Theft of inventory

b. Kiting

c. None of the above

d. Lapping

Which document is used to record adjustments to accounts payable based on the return of
unacceptable inventory to the supplier?

Select one:

a. purchase order

b. credit memo

c. receiving report

d. debit memo

hich of the following graph design principles is most important for ensuring that financial data are
accurately interpreted?
Select one:

a. using different colors for different variables

b.

including a title that summarizes the point of the graph

c.

attaching data values to specific elements in the graph

d.

starting the y-axis of the graph at zero

Move tickets are a control procedure designed to reduce the risk of

Select one:

a. inappropriate allocation of overhead costs

b.

theft of inventory

c.

loss or destruction of production data

d.

disruption of operations

Which of the following controls would be most effective in mitigating the risk of inventory theft?
Select one:

a.

Use of lockboxes

b. Reconciling shipping documents to sales orders, picking lists, and packing slips

c. Separating the functions of shipping and billing

d. Documentation of all transfers of inventory between employees

Which of the following statements are true?

Select one:

a. Both of the statements are true.

b. Organizations can reduce the risk of fraudulent disbursements by sending their bank a list of all
checks issued, a process referred to as “Positive Pay.”

c. Issuing employees procurement cards is an example of the control procedure referred to as “general
authorization.”

d. None of the statements are true.

Journal entries made by either the treasurer or controller should be subject to input edit and processing
controls. A data entry application control that is designed to ensure that the total debits in a journal
entry equal the total credits is called a ______

Select one:

a.

sign check

b.

reasonableness check

c.

equality check
 d. zero-balance check

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An adjusting entry to record bad debt expense is an example of a(n)

Select one:

a.

accrual

b.

deferral

c.

revaluation

d. correction

e.

estimate

For good internal control in an ERP system, sales staff should be permitted to

Select one:

a. issue credit memos

b. adjust customer credit limits

d. neither of the above

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Which document captures information about labor used in production?

Select one:

a.

move ticket

b. operations list

c.

bill of materials

d.

job-time ticket

From where do adjusting entries usually come?

Select one:

a. various accounting cycle subsystems, such as sales order entry

b. controller

c. treasurer

d. unit managers
Which of the following is an important part of the audit trail?

Select one:

a.

trial balance

b.

flexible budgets

c.

journal vouchers

d. data warehouse

MRP-II would most likely be used by a company that produces

Select one:

a.

different grades of milk (e.g., whole, 2%, and skim)

b.
toner cartridges for laser printers

c. none of the above

d.

all of the products

e.

toys based on a new movie

The control procedure of comparing a voucher package to vendor invoices is designed to reduce the risk
of .

Select one:

a. making duplicate payments

b. theft of inventory

c. failure to take advantage of discounts for prompt payment

d. paying for items not received

e. mistakes in posting to accounts payable

Which of the following is true?

Select one:

a. The EOQ formula is used to identify when to reorder inventory

b. It is easier to verify the accuracy of invoices for purchases of services than invoices for purchases of
raw materials
c. A voucher package usually includes a debit memo.

d. Setting up petty cash as an imprest fund violates segregation of duties

the first objective in an IS audit is ensuring the overall security of the system. Select all of the following
controls that would be effective in minimizing the overall security threats faced by an information
system

Select one or more:

a. proper use of internal and external file labels

b. limiting physical access to computer equipment

c. Key verification

d. limiting logical access to the system using authentication and authorizing controls

e. information security/protection plan

The sixth objective in an IS audit is protecting data files. Select all of the following controls that would be
effective in minimizing the threats to a company's data files.

Select one or more:

a. Storage of data in secure file library and restriction of physical access to data files

b. Concurrent update controls

c. Data editing routine

d. Off-site backup of data files

e. Thorough test of program changes, including user acceptance test

Which part of the throughput formula provides information about the impact of equipment downtime
on overall productivity?

Select one:
a. None of the above

b. Productive capacity

c.

Productive processing time

d.

Yield

The production cycle is a recurring set of business activities and related data processing operations
associated with the manufacture of products. What is its second step?

Select one:

a.

product design

b. product operations

Which of the following violates proper segregation of duties?

Select one:

a.

None of the above combinations violate proper segregation of duties.

b. The same person maintains both accounts receivable and accounts payable

c. The same person handles customer payments and has access to blank checks.
d. The same person approves sales orders that exceed a customer’s credit limit and processes and
reconciles the bank account.

e.

All of the above combinations violate proper segregation of duties.

Which threat is most likely to result in the largest losses in a short period of time?

Select one:

a. Theft of inventory

b. None of the statement

c. All of the statements

d. Duplicate payments to suppliers

e. Alteration of checks or EFT payments

Which of the following control procedures is designed to reduce the risk of check alteration fraud?

Select one:

a. Establishing “Positive Pay” arrangements with banks

b. Access controls for EFT terminals

c. Use of dedicated computer and browser for online banking

d. Prenumbering all checks

e. ACH blocks on accounts not used for payments

The HRM department is responsible for updating the payroll master database for internally initiated
changes related to employment.
Select one:

a. False

b.

True

The theory underlying the Balanced Scorecard is that improvements in the ___________________
section will lead to improvements in the ______ section, leading to improvements in the
______________ section, ultimately creating better results in the financial section.

Select one:

a.

customer, learning & innovation, internal

b. internal, customer, learning & innovation

c.

learning & innovation, internal, customer

Violating which of the following principles of graph design would result in distorting the magnitude of a
trend in sales?

Select one:

a. Both

b.

Neither

c.

Displaying trend data in chronological sequence from left-to-right on the x-axis

Starting the y-axis at zWhich of the following controls reduce the risk of issuing paychecks to a
“phantom” or “ghost” employee?

Select one:

a.

All of the statements

b.

Prenumber all payroll checks

c.

Use an imprest account to clear payroll checks

d.

Restrict physical access to blank paychecks

e. None of the statementsero

Which document lists the current amount and year-to-date totals of gross pay, deductions, and net pay
for one employee?

Select one:

a.
paycheck

b.

time card

c. earnings statement

d.

payroll register

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Which system is most likely to be used by a company that mass-produces large batches of standard
items in anticipation of customer demand?

Select one:

a.

MRP-II

b. throughput

c.

activity-based costing
d.

lean manufacturing

Which of the following checks is not an input edit and processing control needed to ensure that journal
entries made by the treasurer are accurate and complete?

Select one:

a. back validation

b. closed-loop verification

c. validity check

d. field (format) checks

For effective internal control, which of the following duties can the person who handles customer
payments also perform?

Select one:

a. All of the above

b. None of the above

c. Maintain accounts receivable

d. Reconcile the bank account

e. Issue credit memos

Kickbacks are a problem because they increase the risk of

Select one:

a. purchasing inferior quality items

b. all of the statements

c. purchasing at inflated prices

e. purchasing inventory that is not needed

Which document is used to authorize the release of merchandise from inventory control (warehouse) to
shipping?

Select one:

a. shipping order

b. picking ticket

c. sales invoice

d. packing slip

Many companies use a _________ to record daily arrival and departure times of the employees who are
paid on an hourly basis.

Select one:

a.

punch card

b.

time card

c.

time sheet

d. entry card
he focus of an operational audit is on which of the following ?

Select one:

a. the reliability and integrity of financial information

b. all aspects of information system management

c. safeguarding assets

d. internal controls

For good internal control, who should sign checks?

Select one:

a. cashier

b. controller

c. accounts payable

d. purchasing agent

Move tickets are a control procedure designed to reduce the risk of

Select one:

a. inappropriate allocation of overhead costs

b.

theft of inventory

c.

disruption of operations
d.

loss or destruction of production data

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The integrated database underlying an ERP system results in which of the following general threats to
the revenue cycle?

Select one:

a. unauthorized disclosure of sensitive

b. loss or destruction of data

c. inaccurate or invalid master data

d. all of the above information

hich of the following is a concurrent audit technique that monitors all transactions and collects data on
those that meet certain characteristics specified by auditor ?

Select one:

a. SCARF

b. ITF

c. snapshot techniques

d. audit hooks

With respect to audit planning, which of the following statements is false ?

a. It determines why, how, when, and by whom the audit will be performed

b. An audit program is prepared to show the nature, extent and timing of the procedures needed to
achieve audit objectives and minimize audit risk

c. A typical audit has a mix of audit procedures, such as observations, documentation reviews, sending
confirmation, an analytical review.

d. Among the final steps in audit planning is establishing the audit's scope and objectives

e. Except for the smallest audit, an audit team with necessary experience and expertise is formed

Which department should have responsibility for authorizing pay-rate changes?

Select one:

a.

HRM

b.

accounting

c.

timekeeping

d.

payroll

he second objective in an IS audit is ensuring proper program development and acquisition. Select all of
the following controls that would be effective in minimizing the program development and acquisition
threats faced by an information system
Select one or more:

a. Management authorization for program development and software aquisition

b. fault-tolerant systems design

c. Casualty and business interruption insurance

d. Reconciliation of batch totals

e. thorough testing of new program, including user acceptance tests

Which of the following control procedures is designed to reduce the risk of ordering unneeded
inventory?

Select one:

a. None of the statements

b. All of the statements

c. Tracking and monitoring product quality by supplier

d.

Purchasing only from approved supplier

e.

Holding purchasing managers responsible for rework and scrap costs

Tokenization is a control that mitigates the risk of

Select one:

a.

Unauthorized changes to payroll master data

b.

Inaccurate or invalid master data

Inaccurate time and attendance data

d. Theft of fraudulent distribution of paychecks

e.

Unauthorized disclosuse of a payroll service bureau or a PEO provides which of the following benefits?

Select one:

a.

less need for developing and maintaining payroll tax expertise

b. all of the statements

c.

lower cost of processing payroll

d.

fewer staff needed to process payrollre of sensitive data