Chapter 14 Flashcards
Digital contracts and technology that records transactions are of great relevance to the modern-day accountant.
Statement (1): Self-verifying smart contracts invoke the automatic execution of defined rules to securely hold and transfer legal title to an asset and how to account for it.
Statement (2): Distributed ledger technology and triple entry bookkeeping allow every accounting transaction recorded by an entity to be posted to a public ledger
accurate + accurate!!!!
distributed denial of service
the use of botnets to disrupt online services by overwhelming a website with a wave of traffic that the system is unable to handle
phishing
bogus emails that ask the user for security info + personal details
FromUsToYou plc is a courier company that promises to deliver parcels to consumers only when the
consumer is home. A consultant has made the following statements about the types of risk which
face FromUsToYou plc.
Statement (1) A competitor could deliberately breach our methods of communicating with both
consumers and courier drivers online, in order to disrupt our services and cause us embarrassment.
Statement (2) A courier driver could mislay her tablet computer, which contains sensitive data about
our customers.
Requirement
Identify whether each statement is an accurate description of cyber risk.
A Statement (1) accurate; Statement (2) inaccurate
B Statement (1) inaccurate; Statement (2) inaccurate
C Statement (1) accurate; Statement (2) accurate
D Statement (1) inaccurate; Statement (2) accurate
C
1 = unintentional or accidental breaches of security, which nevertheless may still constitute an exposure that needs to be addressed
2 = operational IT risks due to poor systems integrity or other factors
A cyber security consultant has listed the following actions that a small to medium-sized business can
take to reduce the risk of cyber-attack:
Action 1: Implement access controls
Action 2: Install internet gateways
Action 3: Use patch management software
Requirement
Which of these actions are included in the UK government’s Cyber Essentials scheme?
A Actions 1 and 2 only
B Actions 2 and 3 only
C Actions 1 and 3 only
D Actions 1, 2 and 3
D
cyber essentials list of actions:
-implement access controls
-install internet gateways
-use patch mgmt software
-malware protection
-secure configuration
6 Hannon Ltd in an online retailer. The company has recently suffered a cyber-attack which resulted in
the company’s website being overwhelmed with vast amounts of traffic which caused it to crash.
Requirement
Which of the following best describes the type of attack Hannon Ltd has suffered?
A Distributed denial of service attack
B Hacking
C Phishing
D Keylogging
A
Which two of the following are suggested by the National Crime Agency to reduce the risk of cyberattacks?
A Encourage staff to use the same password for different systems to ensure they do not forget their passwords
B Install updates to software and operating systems regularly
C Avoid using password management apps
D Use two factor authentication methods at log in
E Monitor unusual activities on the system using data analytics
B D
password mgmt apps = recommended - they will suggest more secure passwords
Rees Ltd uses data analytics to enhance transparency. Insights into which of the following are
provided for Rees Ltd by using data analytics in this way?
A customer buying patterns
B customer needs
C new products and services
D risk identification
A
Many companies’ accounting systems automatically download bank transactions from the banks’ own systems. The accountant then has to record the credit side of cash receipts and the debit side of cash payments.
Bob Ltd has an accounting system that ‘guesses’ where the credit and debit sides of bank transactions should be recorded based on past experience of transactions with similar references.
The accountant at Bob Ltd only has to confirm that the system has the correct transaction by clicking a ‘confirm’ button, or changing the account if the accounting system has guessed the wrong account.
The transaction is then recorded.
What is the process by which Bob Ltd’s accounting system guesses where the payments and receipts should be recorded an example of?
A data analytics
B machine learning
C automation
D audit analytics
B - system learns from past data where the transactions should be recorded
10 Which of the following is a disadvantage for a small business, of using cloud accounting?
A It is expensive, difficult and time-consuming for the business to upgrade cloud accounting
software.
B Only one person in the business can have access to the cloud accounting software at any one
time.
C Accounting data has to be moved from computer to computer manually by the business’s
finance function employees.
D The small business relies completely on the security and backup measures of the provider of the
cloud accounting software.
D
others = disadvantages of traditional accounting software
Priya is investigating the use of cloud accounting for her employer, Withit plc. She has discovered
that accounting information stored in the cloud can be added to or accessed from anywhere, using
any device with an internet connection. She is making a recommendation to her managers on the
use of cloud accounting which contains the following statements.
Statement (1): With the adoption of cloud accounting, Withit’s project managers at client sites can
check whether a payment has been received.
Statement (2): With the adoption of cloud accounting, accounts staff will have the ability to work from
home.
Requirement
Identify whether each statement is accurate.
A Statement (1) accurate; Statement (2) inaccurate
B Statement (1) inaccurate; Statement (2) inaccurate
C Statement (1) accurate; Statement (2) accurate
D Statement (1) inaccurate; Statement (2) accurate
C
A system that allows people who do not know each other to trust a shared record of events is an
example of which type of technology?
A distributed ledger
B cloud computing
C internet of things
D data analytics
A
Tech Ltd has invented a device that allows the temperature controller of the user’s home to be
adjusted automatically by an app on their smartphone, using data about the weather.
Requirement
Of which of the following types of technology is this an example?
A distributed ledger
B cloud computing
C internet of things
D data analytics
C - the transfer of data from a smartphone to a temperature controller
the internet of things
a system of interrelated computing devices, mechanical and digital machines or objects with the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction
Distributed ledger technology and advanced accounting systems may have impacts on the work of
the auditor.
Statement (1): The rate of technological change, such as with distributed ledger technology, is so fast
that auditing regulations in regards to the audit of transactions are now irrelevant.
Statement (2): The use of advanced accounting software reduces the need for auditors to audit
transactions and verify the ownership of assets.
Requirement
Identify whether each statement is accurate.
A Statement (1) accurate; Statement (2) inaccurate
B Statement (1) inaccurate; Statement (2) inaccurate
C Statement (1) accurate; Statement (2) accurate
D Statement (1) inaccurate; Statement (2) accurate
D =
rate of technological change is very fast, therefore audit regulations just need to adapt to them
automation in advanced accounting software means that auditors can place more reliance on systems, reducing the need to audit all transactions and verify the ownership of assets.
some systems allow 100% automatic checking of transactions.
