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.
