AIS (Accounting Information Systems)

Question 1

What are application controls designed to do?

Answer 1

Prevent, detect, and correct errors in a timely manner.

Question 2

What is an ERP?

Answer 2

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),

Question 3

What type of control stops errors or fraud before they occur?

Answer 3

Preventative

Question 4

What type of control finds errors or fraud after they occurred?

Answer 4

Detective

Question 5

What type of control remedies detected errors or fraud after they occur?

Answer 5

Corrective

Question 6

What type of control check verifies entered data to master vendor or pricing data?

Answer 6

Data validation/Verification Control Check

Question 7

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?

Answer 7

Audit Trail. - aka - produced by an ERP system and lists the changes made within the sytem.

Question 8

What are the 2 types of broad controls in the IT environment?

Answer 8

General and Application

Question 9

What are controls that relate to the integrity of the overall IT environment?

Answer 9

General (e.g., system documentation)

Question 10

What are controls that relate to the integrity of specific applications?

Answer 10

Application (e.g. field checks)

Question 11

What is a system that processes transactions periodically?

Answer 11

Batch processing system

Question 12

What is a system that processes transactions immediately?

Answer 12

Online real-time processing

Question 13

What type of risk is resistance from end users resisting change?

Answer 13

Implementation risk

Question 14

What are the 5 components of COSO IC - Integrated Framework?

Answer 14

CRIME - Control environment, Risk Assessment, Control Activities, Information & Communication, Monitoring

Question 15

What are the 7 components of Control Environment?

Answer 15

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

Question 16

What does the Control environment encompass?

Answer 16

The Tone at the Top, Organizational Structure, and Ethical Values

Question 17

What is the main reason a company would outsource their internal audit function?

Answer 17

They are in a highly regulated industry (banking, insurance, and healthcare) that requires technical compliance expertise.

Question 18

What are the 3 types of blockchains?

Answer 18

Private, consortium, and public.

Question 19

What is the riskiest (on financial statements) blockchain and why?

Answer 19

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.

Question 20

What is a control that ensures data transmission is prompt, accurate, and complete?

Answer 20

Data interface control

Question 21

What is the completeness assertion?

Answer 21

All transactions have been recorded.

Question 22

What are the 3 types of general controls?

Answer 22

Access controls, Change controls, and operations controls.

Question 23

What is one of the major benefits of an ERP?

Answer 23

It is a single source of truth. Connects to a single relational database based on a uniform data structure.

Question 24

When is Audit evidence most reliable?

Answer 24

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.

Question 25

How does automation improve data accuracy?

Answer 25

it reduces manual data entry errors.

Question 26

What are the 3 types of application controls?

Answer 26

Input, Processing, and output.

Question 27

What is the purpose of output controls?

Answer 27

They ensure that reports (outputs) are distributed or made available only to authorized personnel.

Question 28

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?

Answer 28

A UML (Unified Modeling Language) diagram or Entity Relationship Diagram (ERD)

Question 29

What is one of the major benefits of an ERP?

Answer 29

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.

Question 30

What is the best defense to the risk of Pseudo-anonymity of blockchain parties?

Answer 30

A blockchain code of conduct

Question 31

What is machine learning?

Answer 31

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.

Question 32

What does it mean that blockchain records are immutable?

Answer 32

Means that they are encrypted and cannot be changed. Since they cannot be reversed there is an increased need for preventative controls.

Question 33

What type of data do AIS systems primarily use?

Answer 33

Structured data ( text, dates, numbers etc.) Easier to organize in a relational database and query.