19.2 Data Governance and the Data Life Cycle Flashcards
All of the following are correct statements associated with keeping and maintaining records for an organization except
A. Tax records are available to prove lack of fraud
B. Unneeded record retention costs are created
C. Records that may be needed for a future legal case are retained
D. It complies with data purging requirements
B. Unneeded record retention costs are created
Which of the following best characterizes data maintenance in the data life cycle?
A. The cleansing and enrichment of the data
B. Actually processing all data submitted for processing
C. Keeping data away from unauthorized access
D. Keeping old data in a storage location
A. The cleansing and enrichment of the data
Data maintenance often involves cleansing and enrichment of the data.
Risk modeling, actuarial modeling, and modeling for investment decisions are all examples of
A. Data usage
B. Parallel simulation
C. Data analytics
D. Enrichment of the data
C. Data analytics
Data analytics can be defined as the creation of data values by using inductive logic. It uses modeling, such as risk modeling, actuarial modeling, and modeling for investment decisions, and typically involves using other data as inputs.
Which of the following characteristics distinguishes computer processing from manual processing?
A. Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing.
B. Errors or fraud in computer processing will be detected soon after their occurrence.
C. The potential for systematic error is ordinarily greater in manual processing than in computerized processing.
D. Most computer systems are designed so that transaction trails useful for audit purposes do not exist.
A. Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing.
Computer processing uniformly subjects like transactions to the same processing instructions. Once the program is written and tested appropriately, it will perform the task repetitively and without error. However, if the program contains an error, all transactions will be processed incorrectly.
Which of the following risks are greater in computerized systems than in manual systems?
I. Erroneous data conversion
II. Erroneous source document preparation
III. Repetition of errors
IV. Concentration of data
A. II and III
B. I, III, and IV
C. I, II, III, and IV
D. I and II
B. I, III and IV
Unlike a manual system, a computer system converts data to machine-readable form so that transactions can be processed. This additional step increases the risk of input error. Moreover, if an error exists in the program, systematic, repetitive errors will occur in processing transactions. Finally, data are typically stored magnetically or optically on disks. This concentration of data increase the risk of loss from natural and other disasters. Source document preparation either precedes processing or is eliminated altogether in a computerized system. Thus, the risk of erroneous source document preparation in computerized systems is the same as or less than the equivalent risk in manual systems.
Which of the following is not a reason to have a formal record retention policy?
A. To enhance the usefulness of records
B. To protect sensitive information from unauthorized disclosure
C. To meet minimum holding periods imposed by law
D. To lower costs for an organization
A. To enhance the usefulness of records
A formal record retention policy only facilitates the management of the records. It does not enhance the usefulness of records. An organization’s formal policy would include record categorization, record location, and a retention schedule with guidelines for the length of time to keep records before they are destroyed.
Which of the following is an advantage of a computer-based system for transaction processing over a manual system? A computer-based system
A. Will be more efficient at producing financial statements
B. Eliminates the need to reconcile control accounts and subsidiary ledgers
C. Does not require as stringent a set of internal controls
D. Will produce a more accurate set of financial statements
A. Will be more efficient at producing financial statements
Computer processing permits consistent application of predefined business rules and the performance of complex calculations in high volume. Hence, computer processing of the accounting transactions reported in financial statements is more efficient than in a manual system.
Which of the following is the least likely explanation for having a formal record retention policy?
A. To destroy evidence of noncompliance and fraud
B. To periodically destroy documents
C. To comply with minimum retention periods imposed by law
D. To control costs of storing records
A. To destroy evidence of noncompliance and fraud
Illegal activities, such as noncompliance and fraud, are the least likely explanation for having a formal record retention policy. Once litigation is likely, it is too late to establish a records retention policy or to begin complying with a policy that was not followed in the past.
Storing records longer than needed can create an enormous challenge when a company
A. Periodically destroys old documents
B. Is suspected of having filed a fraudulent tax return
C. Needs to find relevant records for a legal dispute
D. Is not part of a regulated industry
C. Needs to find relevant records for a legal dispute
If a company becomes involved in a legal dispute, the task of going through a voluminous amount of records to produce relevant material can become an enormous and costly challenge. Additionally, keeping and maintaining too many records, or storing them longer than needed, can create unneeded costs for an organization.
As a result of technological developments facing businesses,
A. Internet use has spread, and e-business control over user interaction has been simplified
B. Better controls have resulted in a reduction in threats
C. System boundaries are becoming less distinct
D. Computer programmers and operators have eliminated the need for accountants
C. System boundaries are becoming less distinct.
Organizational system boundaries are becoming indistinct as electronic interactions with suppliers, customers, partners, and associates increase. Thus, CPAs have more difficulty in giving assurance about security, control, and privacy.
