Order ID | 53563633773 |
Type | Essay |
Writer Level | Masters |
Style | APA |
Sources/References | 4 |
Perfect Number of Pages to Order | 5-10 Pages |
Testing IT Controls in A Payroll System
15.An auditor who is testing IT controls in a payroll system would most likely use test data that contain conditions such as:
a.time tickets with invalid job numbers.
b.overtime not approved by supervisors.
c.deductions not authorized by employees.
d.payroll checks with unauthorized signatures.
16.Which of the following is not a general control?
a.The plan of organization and operation of IT activity.
b.Procedures for documenting, reviewing, and approving systems and programs.
c.Processing controls.
d.Hardware controls.
17.The most important output control is:
a.distribution control, which assures that only authorized personnel receive the reports generated by the system.
b.review of data for reasonableness by someone who knows what the output should look like.
c.control totals, which are used to verify that the computer’s results are correct.
d.logic tests, which verify that no mistakes were made in processing.
18.______ link equipment in large geographic regions.
a.Cosmopolitan area networks (CANs)
b.Local area networks (LANs)
c.Wide area networks (WANs)
d.Virtual area networks (VANs)
19.When using the test data approach:
a.test data should include only exception conditions.
b.application programs tested must be virtually identical to those used by employees.
c.select data may remain in the client system after testing.
d.none of the above statements is correct.
20.What tools do companies use to limit access to sensitive company data?
a.Encryption techniques.
b.Digital signatures.
c.Firewalls.
d.All of the above.
21.Collectively, procedures performed to obtain an understanding of the entity and its environment, including internal controls, represent the auditor’s:
a.audit strategy.
b.tests of controls.
c.risk assessment procedures.
d.tests of transactions.
22.Which of the following procedures are frequently performed in response to the auditor’s assessment of the risk of material misstatement?
a.Analytical procedures
b.Tests of transactions
c.Tests of details of balances
d.All of the above
23.The purpose of tests of controls is to provide reasonable assurance that the:
a.accounting treatment of transactions and balances is valid and proper.
b.internal control procedures are functioning as intended.
c.entity has complied with GAAP disclosure requirements.
d.entity has complied with requirements of quality control.
24.The most important consideration in developing the audit plan and audit program is the:
a.client’s size.
b.client’s industry.
c.audit firm’s available personnel.
d.the audit risk model used in its planning form.
25.When the auditor finds that there are missing controls in an area of the accounting system, the audit program in that area would be modified in such a way as to:
a.increase the number of tests of controls.
b.increase the reliance on tests of controls.
c.cause the issuance of a qualified or adverse opinion.
d.eliminate the need for a test of controls.
26.A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a:
a.test of controls.
b.substantive test.
c.test of attributes.
d.monetary-unit sampling test.
27.The primary emphasis in most tests of details of balances is on the:
a.balance sheet accounts.
b.income statement accounts.
c.cash flow statement account.
d.all of the above.
28.Which of the following audit tests is usually the least costly to perform?
a.Analytical procedures.
b.Tests of controls.
c.Tests of balances.
d.Substantive tests of transactions.
29.Auditors who test manual controls that rely on IT-generated reports must consider:
a.the benefits of relying on IT-generated reports.
b.the effectiveness of management’s review.
c.the controls related to the accuracy of the information in the report.
d.both b and c.
30.Which of the following types of evidence is not available when using substantive tests of transactions?
a.Documentation.
b.Confirmation.
c.Inquiries of the client.
d.Reperformance.
31.Which of the following is not one of the five classes of transactions included in the sales and collection cycle?
a.Sales returns and allowances
b.Charge-off of uncollectible accounts
c.Bad debt expense
d.Depreciation expense
32.What event initiates a transaction in the sales and collection cycle?
a.Receipt of cash.
b.Delivery of product to a customer.
c.Identification of a new customer.
d.Customer request for goods.
33.What critical event must take place before goods can be shipped?
a.Determination of correct delivery address
b.Credit approval
c.Receipt of cash
d.Receipt of sales order from the customer
34.Which of the following is not a business function within the “Sales” class of transactions?
a.Processing customer orders.
b.Granting credit.
c.Processing and recording sales returns and allowances.
d.Shipping goods.
35.The process which postpones entries for the collection of receivables to conceal an existing cash shortage is referred to as:
a.kiting.
b.lapping.
c.floating.
d.shorting.
36.When sales invoices are automatically calculated and posted by a computer, the auditor may be able to reduce substantive tests of transactions for which, if any, objective?
a.Accuracy
b.Existence
c.Completeness
d.None of the above
37.The most important aspects of the billing function include all but which of the following?
a.Making sure that all shipments have been billed.
b.Making sure that no shipment has been billed more than twice.
c.Making sure that each shipment is billed at the correct amount.
d.All of the above are correct.
38.In which of the following will sales return and allowances not be recorded?
a.Sales returns and allowances transaction file
b.Accounts receivable master file
c.Cash receipts journal
d.Sales returns and allowances will be recorded in all of the above
39.Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts?
a.Company personnel.
b.Temporary employees in the town where the lockbox is located.
c.Bank employees.
d.None of the above.
40.For most firms, the function of indicating credit approval is recorded on the:
a.sales order.
b.sales invoice.
c.customer order.
d.remittance advice.
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