CH 12

Question 1

How do information technologies enhance internal controls?

Answer 1

1) computer controls replace manual controls

2) Higher-quality information is available

Question 2

What are risks of information technologies?

Answer 2

1) Risks to hardware and data
2) Reduced audit trail
3) Need IT experience and separation of IT duties

Question 3

How risks to hardware and data?

Answer 3

1) Reliance on hardware and software
2) Unauthorized access
3) Data loss
4) Systematic vs Random errors

Question 4

what are the components that make up reduced audit trail?

Answer 4

1) Visibility of audit trail
2) Lack of traditional authorization
3) Reduced human involvement
( all increase detection risks)

Question 5

What are internal contorls specfic to information technology?

Answer 5

1) application of controls

2) General controls

Question 6

What are systems of development?

Answer 6

1) typical test strategies
a) pilot testing
b) Parallell testing

Question 7

What are physical and online security controls: online and physical?

Answer 7

1) online
a) user id
b) password control
c) separate add on security software

2) Physical controls
a) keypad entrances
b) badge entry systems
c) security cameras
d) Security personnel

Question 8

Are backup of critical files are part of contingency plan?

Answer 8

1) yes

Question 9

What are application controls?

Answer 9

1) designed to control for each software application
a) input controls
b) output controls
c) processing controls

Question 10

What are three batch input controls?

Answer 10

1) financial total ( all records in batch)
2) Hash total( all codes from records)
3) record count ( total of records in a batch)

Question 11

What are the five processing controls?

Answer 11

1) validation test
2) sequence test
3) arithmetic accuracy test
4) data reasonableness test
5) Completeness test

Question 12

What do out put controls do?

Answer 12

1) focus on detecting errors after processing is completed rather than on preventing errors

Question 13

What is the impact of information technology?

Answer 13

1) general contorls on system wide applications
2) effects of general controls on software changes
3) Obtaining an understanding of client general controls
4) Relating IT controls to transaction related audit objectives
5) effect of IT controls on substantive testing

Question 14

How does IT environments , while auditing, varied complexity?

Answer 14

1) Less
a) audit around the computer
i) smaller companies
ii) IT controls less effective

2) more
a) Audit through the computer
i) Parallel
ii) Test data