ais 12 Flashcards
1
Q
- All of the following are issues of computer security except
a. releasing incorrect data to authorized individuals.
b. permitting computer operators unlimited access to the computer room.
c. permitting access to data by unauthorized individuals.
d. providing correct data to unauthorized individuals.
A
b. permitting computer operators unlimited access to the computer room.
2
Q
- Which characteristic is not associated with software as intellectual property?
a. uniqueness of the product
b. possibility of exact replication
c. automated monitoring to detect intruders
d. ease of dissemination
A
c. automated monitoring to detect intruders
3
Q
- For an action to be called fraudulent, all of the following conditions are required except
a. poor judgment.
b. false representation.
c. intent to deceive.
d. injury or loss.
A
a. poor judgment.
4
Q
- One characteristic of employee fraud is that the fraud
a. is perpetrated at a level to which internal controls do not apply.
b. involves misstating financial statements.
c. involves the direct conversion of cash or other assets to the employee’s personal benefit.
d. involves misappropriating assets in a series of complex transactions involving third parties.
A
c. involves the direct conversion of cash or other assets to the employee’s personal benefit.
5
Q
- Forces that may permit fraud to occur do not include
a. a gambling addiction.
b. lack of segregation of duties.
c. centralized decision-making environment.
d. questionable integrity of employees.
A
c. centralized decision-making environment.
6
Q
- Who is responsible for establishing and maintaining the internal control system?
a. the internal auditor
b. the accountant
c. management
d. the external auditor
A
c. management
7
Q
- Which of the following indicates a strong internal control environment?
a. The internal audit group reports to the audit committee of the board of directors.
b. There is no segregation of duties between organization functions.
c. There are questions about the integrity of management.
d. Adverse business conditions exist in the industry.
A
a. The internal audit group reports to the audit committee of the board of directors.
8
Q
- Employee fraud involves three steps. Of the following, which is not involved?
a. concealing the crime to avoid detection
b. stealing something of value
c. misstating financial statements
d. converting the asset to a usable form
A
c. misstating financial statements
9
Q
- The importance to the accounting profession of the Sarbanes-Oxley Act of 2002 is that
a. bribery will be eliminated.
b. management will not be able to override the company’s internal controls.
c. firms are required to have an effective internal control system.
d. firms will not be exposed to lawsuits.
A
c. firms are required to have an effective internal control system.
10
Q
- The board of directors consists entirely of the CEO’s close business associates and management of the organization. This
a. indicates a weakness in the accounting system.
b. is incompliant with the Sarbanes-Oxley Act.
c. is a red flag for auditors to review and report on executive compensation.
d. is a normal board structure and not an issue of audit concern.
A
b. is incompliant with the Sarbanes-Oxley Act
11
Q
- Business ethics involves
a. how managers decide on what is right in conducting business.
b. how managers achieve what they decide is right for the business.
c. both a and b.
d. only a.
A
c. both a and b.
12
Q
- All of the following are conditions for fraud except
a. false representation.
b. injury or loss.
c. intent.
d. material reliance.
A
d. material reliance.
13
Q
- Management can expect various benefits to follow from implementing a system of strong internal control. Which of the following benefits is least likely to occur?
a. reduced cost of an external audit
b. preventing employee collusion to commit fraud
c. availability of reliable data for decision making purposes
d. some assurance of compliance with the Foreign Corrupt Practices Act of 1977
e. some assurance that important documents and records are protected
A
b. preventing employee collusion to commit fraud
14
Q
- Which of the following situations is not a segregation of duties violation?
a. The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine.
b. The warehouse clerk, who has the custodial responsibility over inventory in the ware-
house, selects the vendor and authorizes purchases when inventories are low.
c. The sales manager has the responsibility to approve credit and the authority to write off accounts.
d. The department time clerk is given the undistributed payroll checks to mail to absent employees.
e. The accounting clerk who shares the record keeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account.
A
a. The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine.
15
Q
- What does the underlying assumption of reasonable assurance regarding implementation of internal control mean?
a. Auditors are reasonably assured that fraud has not occurred in the period.
b. Auditors are reasonably assured that employee carelessness can weaken an internal control structure.
c. Implementation of the control procedure should not have a significant adverse effect on efficiency or profitability.
d. Management assertions about control effectiveness should provide auditors with reason- able assurance.
e. A control applies reasonably well to all forms of computer technology.
A
d. Management assertions about control effectiveness should provide auditors with reason- able assurance.
