Individual Quiz - IT in Auditing - Audit 2
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School
University of Technology Malaysia, Johor Bahru, Skudai**We aren't endorsed by this school
Course
AHIBS SHAC3173
Subject
Accounting
Date
Dec 17, 2024
Pages
3
Uploaded by ColonelRain4566
MULTIPLE CHOICE QUESTIONS FROM CPA EXAMINATIONS 12-17 (Objectives 12-1, 12-4) The following questions concern the characteristics of IT systerns Submission deadline: Choose the best response. (1161%%% r2T824 a. Effective management of information technologies in an organization embraces the view. point that (1) most technologies reduce existing risk conditions. (2) technologies reduce some types of risks while introducing new types of risks to be managed. (3) technologies generally increase an organization’s overall net risks. (4) the objective of technology implementations is to increase profitability on a net basis. b. Which of the following is generally not considered a category of IT general controls? (1) Controls that determine whether a vendor number matches the pre-approved vendors in the vendor master file. (2) Controls that restrict system-wide access to programs and data. (3) Controls that oversee the acquisition of application software. (4) Controls that oversee the day-to-day operation of IT applications. c. Asgeneral IT controls weaken, the auditor is most likely to (1) reduce testing of automated application controls done by the computer. (2) increase testing of general IT controls to conclude whether they are operating effectively. (3) expand testing of automated application controls used to reduce control risk to cover greater portions of the fiscal year under audit. (4) ignore obtaining knowledge about the design of general IT controls and whether they have been implemented. d. Which of the following is an example of an application control? (1) The client uses access security software to limit access to each of the accounting applications. (2) Employees are assigned a user ID and password that must be changed every quarter. (3) The sales system automatically computes the total sale amount and posts the total to the sales journal master file. (4) Systems programmers are restricted from doing applications programming functions. CamScanner
12-22 (Objective 12-3) During your audit of Willson Sports Sdn Bhd, a retail chain of stores, yoy learn that a programmer made an unauthorized change to the sales application program even though no work on that application had been approved by IT management. In order for the sales application program to work, the programmer had to make modifications to the operating software security features. The unauthorized change forced the sales program to calculate an automatic discount for a customer who happens to be the brother-in-law of the programmer. The customer and programmer split the savings from the unauthorized discount. The programmer modified the program and returned it to the librarian who placed it into the files for live production use. No other information was forwarded to the librarian. Required 1. What recommendation do you have for management of Willson Sports Sdn Bhd to prevent this from recurring". (3 recommendations) 2. Explain why you believe the suggested internal control improvements will prevent problems in the future. 12-23 (Objectives 12-1, 12-2, 12-3, 12-4, 12-5) You are conducting an audit of sales for the Joshua Department Store, a retail chain store with a computer-based sales system in which computer-based cash registers are integrated directly with accounts receivable, sales, perpetual inventory records, and sales commission expense. At the time of sale, the salesclerks key-enter the following information directly into the cash register: » Product number Quantity sold « Unit selling price » Store code number The total amount of the sale, including sales tax, is automatically computed by the system and indicated on the cash register’s visual display. The only printed information for cash sales is the cash register receipt, which is given to the customer. For credit sales, a credit slip is prepared and one copy is retained by the clerk and submitted daily to the accounting department. A summary of sales is printed out daily in the accounting department. The summary includes daily and monthly totals by salesclerks for each store as well as totals for each of 93 categories of Salesclerk number Date of sale Cash sale or credit sale Customer account number for all credit sales "HE AUDIT PROCESS
ise by ¢ > - : : mcrchapdl ¢ l)b store. Perpetual inventory and accounts receivable records are updated daily on magnelic tape, but supporting records are limited primarily to machinereadable records. ’ . \a:. What major problems does the auditor face in verifying sales and accounts receivable? pr can the concept of test data be used in the audit? Explain the difficulties the auditor will have to overcome in using test data. ¢. How can generalized audit software be used in this audit? List several tests that can be con- ducted by using this approach. d. The client would also like to reduce the time it takes to key-enter the information into the cash register. Suggest several ways in which this can be accomplished, considering the information now being key-entered manually. s um i r~a . - - =\ a v . ~ 1 ™1 1 . , S TR S o DRI QRPN Py fnr f"\b Required