AIS (Accounting Information Systems) Flashcards
What are application controls designed to do?
Prevent, detect, and correct errors in a timely manner.
What is an ERP?
Enterprise Resource Planning System and it is a packaged “off the shelf” business information system. They automate business processes, share common data, and facilitate reporting in a real time environment. WorkDay? HR, Finance (Payroll),
What type of control stops errors or fraud before they occur?
Preventative
What type of control finds errors or fraud after they occurred?
Detective
What type of control remedies detected errors or fraud after they occur?
Corrective
What type of control check verifies entered data to master vendor or pricing data?
Data validation/Verification Control Check
What is a detective control that shows the history of when inventory items were ordered and received along with the user who entered the transaction?
Audit Trail. - aka - produced by an ERP system and lists the changes made within the sytem.
What are the 2 types of broad controls in the IT environment?
General and Application
What are controls that relate to the integrity of the overall IT environment?
General (e.g., system documentation)
What are controls that relate to the integrity of specific applications?
Application (e.g. field checks)
What is a system that processes transactions periodically?
Batch processing system
What is a system that processes transactions immediately?
Online real-time processing
What type of risk is resistance from end users resisting change?
Implementation risk
What are the 5 components of COSO IC - Integrated Framework?
CRIME - Control environment, Risk Assessment, Control Activities, Information & Communication, Monitoring
What are the 7 components of Control Environment?
CHOPPER
C - Commitment to competence
H - Human resource policies and practices
O - Organizational structure
P - Participation of those charged with
governance
P - Philosophy and operating style of
management
E - Ethical values and integrity
R - Responsibility assignement
What does the Control environment encompass?
The Tone at the Top, Organizational Structure, and Ethical Values
What is the main reason a company would outsource their internal audit function?
They are in a highly regulated industry (banking, insurance, and healthcare) that requires technical compliance expertise.
What are the 3 types of blockchains?
Private, consortium, and public.
What is the riskiest (on financial statements) blockchain and why?
Public blockchain (Bitcoin, Dogecoin) because control is decentralized. No clear oversight body. If conflicts arise there may be no recourse because no one is minding the store.
What is a control that ensures data transmission is prompt, accurate, and complete?
Data interface control
What is the completeness assertion?
All transactions have been recorded.
What are the 3 types of general controls?
Access controls, Change controls, and operations controls.
What is one of the major benefits of an ERP?
It is a single source of truth. Connects to a single relational database based on a uniform data structure.
When is Audit evidence most reliable?
When it can be verified against an original external source. The integrity of the audit evidence is decreased when the blockchain data require off-chain summarization or ad hoc transformation for financial recording purposes.
How does automation improve data accuracy?
it reduces manual data entry errors.
What are the 3 types of application controls?
Input, Processing, and output.
What is the purpose of output controls?
They ensure that reports (outputs) are distributed or made available only to authorized personnel.
What is a diagram that is a visual representation of a conceptual date model that shows the tables in a database and the associations between them?
A UML (Unified Modeling Language) diagram or Entity Relationship Diagram (ERD)
What is one of the major benefits of an ERP?
It is a single source of truth. Connects to a single relational database based on a uniform data structure. Can improve DATA QUALITY as the single source of truth.
What is the best defense to the risk of Pseudo-anonymity of blockchain parties?
A blockchain code of conduct
What is machine learning?
After computers process and analyze enough data, algorithms recognize patterns and make connections. In accounting, repetitive tasks, such as allocating expenses to the proper gl account can be automated through machine learning.
What does it mean that blockchain records are immutable?
Means that they are encrypted and cannot be changed. Since they cannot be reversed there is an increased need for preventative controls.
What type of data do AIS systems primarily use?
Structured data ( text, dates, numbers etc.) Easier to organize in a relational database and query.
