Test 1

Question 1

Why is Studying AIS important?

Answer 1

an AIS helps to achieve components of the conceptual framework

Studying AIS develops core competencies

Learning about AIS helps students to learn about common business processes

Question 2

List the 6 Core competencies

Answer 2

Strategic/ critical thinking 
Resource management 
Risk analysis 
Research 
Problem solving and decision making 
Communication

Question 3

Inputs 
Processes 
Outputs 
Storage 
Internal controls

Answer 3

The 5 parts of an AIS structure

Question 4

What are the 5 criteria for evaluating information?

Answer 4

Authority
Accuracy
Objectivity
Currency
Coverage

Question 5

Sequential numbering
Physical security
Transaction limits

Answer 5

Common internal controls associated with source documents

Question 6

Sequential
Block
Hierarchical
Mnemonic

Answer 6

The four types of coding systems

Question 7

Designing source documents
Recognizing recordable transactions
Estimating amounts and interpreting accounting rules

Answer 7

When human judgement is used in AIS

Question 8

A process affected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance

Answer 8

Internal Control

Question 9

A set of interrelated activities, documents, and technologies designed to collect data, process it, and report it to a diverse group of internal and external users.

Answer 9

Accounting information system

Question 10

Why are Internal controls important?

Answer 10

Legally mandated

Helps a company operate efficiently

Question 11

3 characteristics of internal controls

Answer 11

Internal control is a process
Involves people
Designed to provide reasonable assurance

Question 12

What are the 4 purposes of internal controls?

Answer 12

Safeguarding assets
Ensuring financial stmt reliability
Promoting efficiency
Encouraging compliance with MGT directives

Question 13

What are the 4 categories of risk in Browns taxonomy?

Answer 13

Financial
Operational
Strategic
Hazard

Question 14

Financial risks include:

Answer 14

Market risk
Credit risk
Liquidity risk

Question 15

Operational risks include:

Answer 15

Systems risk

Human error risk

Question 16

Strategic risks include:

Answer 16

Legal and regulatory risk

business strategy risk

Question 17

COSO’s internal control framework:

Answer 17

1. Control environment
2. Risk assessment
3. Control activities
4. Information and communication
5. Monitoring

Question 18

Adequate documentation, background checks, back up of computer files, back up of power supplies, bank reconciliation, batch control totals, data encryption, document matching, echo checks, firewalls, insurance and bonding, internal audits, limit checks, lockbox systems, physical security, preformatted data entry screens, etc

Answer 18

Examples of internal controls

Question 19

What are the 7 steps in the SDLC?

Answer 19

Initiation/planning, 
requirements analysis, 
design, 
build, 
test, 
implementation, 
operations and maintenance.

Question 20

The 5 levels of the CMM

Answer 20

1. Chaotic
2. Repeatable
3. Defined
4. Managed
5. Optimized

Question 21

Macro level factors for information technology selection:

Answer 21

Need,
strategic fit,
personal involvement,
financing

Question 22

Micro level factors for information technology selection

Answer 22

Cost,
adaptability,
training,
vendor reliability.