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134. From an audit viewpoint, which of the following represents apotential disadvantage associated with the widespread use ofmicrocomputers?a. Their portability.b.Their ease of access by novice users.c. Their easily developed programs using spreadsheetswhich do not have to be documented.d. All of the above. 135. Which of the following functions would have the least effect onan audit if it was not properly segregated? a. The systems analyst and the programmer functions.b. The computer operator and programmer functions.c. The co mputer operator and the user functions.d.The applications programmer and the systemsprogrammer. 136. To obtain evidence that user identification and passwordcontrol procedures are functioning as designed, an auditorwould most likely a. Attempt to sign on to the system using invalid useridentifications and passwords.b. Write a computer program that simulates the logic ofthe client’s access control software. c. Extract a random sample of processed transactionsand ensure that the transactions were appropriatelyauthorized. Examine statements signed byemployees stating that they have not divulged theiruser identifications and passwords to any otherperson. 137. In considering a client's internal control structure in a computerenvironment, the auditor will encounter general controls andapplication controls. Which of the following is an applicationcontrol?a. Organization charts.b.Hash total. c. Systems flowcharts.d. Control over program changes 138. Auditing by testing the input and output of a computer system--i.e., auditing "around" the computer--instead of the computersoftware itself willa.Not detect program errors that do not appear in theoutput sampled.b. Detect all program errors, regardless of the nature ofthe output.c. Provide the auditor with the same type of evidence.d. Not provide the auditor with confidence in the resultsof the auditing procedures. 139. Smith Corporation has numerous customers. A customer file iskept on disk. Each customer file contains the name, address,credit limit, and account balance. The auditor wishes to testthis file to determine whether credit limits are being exceeded.The best procedure for the auditor to follow would be toa. Develop test data that would cause some accountbalances to exceed the credit limit and determine ifthe system properly detects such situations.b.Develop a program to compare credit limits withaccount balances and print out the details of anyaccount with a balance exceeding its credit limit.c. Request a printout of all account balances so theycan be manually checked against the credit limits.d. Request a printout of a sample of account balancesso they can be individually checked against the creditlimits. 140. Which of the following methods of testing application controlsutilizes software prepared by the auditors and applied to theclient's data?a.Parallel simulation.b. Integrated test facility.c. Test data.d. Exception report tests. 141. The test – data method is used by auditors to test thea. Accuracy of input data.b. Validity of the output.c.Procedures contained within the program.d. Normalcy of distribution of test data. 142. Which of the following is true of generalized audit software?a. They can be used only in auditing online computersystems.b. They can be used on any computer withoutmodification.c.They each have their own characteristics, which theauditor must carefully consider before using in agiven audit situation.d. They enable the auditor to perform all manualcompliance test procedures less expensively. 143. Assume that an auditor estimated that 10,000 checks wereissued during the accounting period. If an application controlthat performs a limit check for each check request is to besubjected to the auditor's test – data approach, the sampleshould include:a. Approximately 1,000 test items.b. A number of test items determined by the auditor tobe sufficient under the circumstances.c. A number of test items determined by the auditor'sreference to the appropriate sampling tables.d.One transaction.

144. PC DOS, MS DOS, and AppleDOS are examples ofa. Application software.b. Generalized audit software.c. Database management systems.d.Operating software. 145. Which of the following is not an example of a computer-assisted audit technique? a. Integrated test data. b. Audit modules. c.Disk operating systems.d. Audit hooks. 146. Which of the following statements most likely represents adisadvantage for an entity that maintains computer data filesrather than manual files? a. It's usually more difficult to detect transpositionerrors. b. Transactions are usually authorized before they areexecuted and recorded. c.It's usually easier for unauthorized persons to accessand alter the files.d. Random error is more common when similartransactions are processed in different ways. 147. Which of the following statements best describes a weaknessoften associated with computers? a. Computer equipment is more subject to systemserror than manual processing is subject to humanerror. b. Computer equipment processes and records similartransactions in a similar manner. c. Control activities for detecting invalid and unusualtransactions are less effective than manual controlactivities. d.Functions that would normally be separated in amanual system are combined in a computer system. 148. Accounting functions that are normally considered incompatiblein a manual system are often combined by computer software.This necessitates an application control that preventsunapproved a. Access to the computer library. b.Revisions to existing software.c. Usage of software. d. Testing of modified software. 149. When software or files can be accessed from on-line servers,users should be required to enter a. A parity check. b. A personal identification code.

c. A self-diagnosis test. d. An echo check.

150. An auditor's consideration of a company's computer controlactivities has disclosed the following four circumstances.Indicate which circumstance constitutes a significant deficiencyin internal control. a. Computer operators do not have access to thecomplete software support documentation. b.Computer operators are closely supervised byprogrammers.c. Programmers are not authorized to operatecomputers. d. Only one generation of backup files is stored in anoff-premises location.

151. In a computer system, hardware controls are designed toa. Arrange data in a logical sequence for processing.b. Correct errors in software.c. Monitor and detect errors in so urce documents.d.Detect and control errors arising from use ofequipment. 152. In the weekly computer run to prepare payroll checks, a checkwas printed for an employee who had been terminated theprevious week. Which of the following controls, if properlyutilized, would have been most effective in preventing the erroror ensuring its prompt detection?a. A control total for hours worked, prepared from timecards collected by the timekeeping department.b. Requiring the treasurer's office to account for thenumber of the prenumbered checks issued to theCBIS department for the processing of the payrollc. Use of a check digit for employee numbersd. Use of a header label for the payroll input sheet 153. An auditor is preparing test data for use in the audit of acomputer based accounts receivable application. Which of thefollowing items would be appropriate to include as an item inthe test data?a. A transaction record which contains an incorrectmaster file control totalb. A master file record which contains an invalidcustomer identification numberc. A master file record which contains an incorrectmaster file control totald. A transaction record which contains an invalidcustomer identification number.

154. Unauthorized alteration of on-line records can be prevented byemploying:a. Key verificationb. Computer sequence checksc. Computer matchingd.Data base access controls 155. In auditing through a computer, the test data method is used byauditors to test thea. Accuracy of input datab. Validity of the outputc.Procedures contained within the programd. Normalcy of distribution of test data. 156. In the preliminary survey the auditor learns that a departmenthas several microcomputers. Which of the following is usuallytrue and should be considered in planning the audit?a.Microcomputers, though small, are capable ofprocessing financial information, and physicalsecurity is a control concernb. Microcomputers are limited to applications such asworksheet generation and do not present asignificant audit riskc. Microcomputers are generally under the control ofthe data processing department and use the samecontrol featuresd. Microcomputers are too small to contain any built-incontrol features. Therefore, other controls must berelied upon. 157. The primary reason for internal auditing's involvement in thedevelopment of new computer-based sysstems is to:a. Plan post-implementation reviewsb.Promote adequate controlsc. Train auditors in CBIS techniquesd. Reduce overall audit effort. 158. Which of the following is an advantage of generalized computeraudit packages?a. They are all written in one identical computerlanguageb.They can be used for audits of clients that usediffering CBIS equipment and file formatsc. They have reduced the need for the auditor to studyinput controls for CBIS related proceduresd. Their use can be substituted for a relatively large partof the required control testing 159. Processing simulated file data provides the auditor withinformation about the reliability of controls from evidence thatexists in simulated files. One of the techniques involved in thisapproach makes use ofa. Controlled reprocessingb. Program code checkingc. Printout reviewsd.Integrated test facility 160. Which of the following statements most likely represents adisadvantage for an entity that keeps microcomputer-prepareddata files rather than manually prepared files?a. It is usually more difficult to detect transpositionerrorsb. Transactions are usually authorized before they areexecuted and recordedc.It is usually easier for unauthorized persons toaccess and alter the filesd. Random error associated with processing similartransactions in different ways is usually greater 161. The possibility of losing a large amount of information stored incomputer files most likely would be reduced by the use ofa.Back-up filesb. Check digitsc. Completeness testsd. Conversion verification 162. An integrated test facility (ITF) would be appropriate when theauditor needs toa. Trace a complex logic path through an applicationsystemb.Verify processing accuracy concurrently withprocessingc. Monitor transactions in an application systemcontinuouslyd. Verify load module integrity for production programs 163. Where computer processing is used in significant accountingapplications, internal accounting control procedures may bedefined by classifying control procedures into two types:general anda. Administrativeb. Specificc. Applicationd. Authorization 164. The increased presence of the microcomputer in the workplacehas resulted in an increasing number of persons having accessto the computer. A control that is often used to preventunauthorized access to sensitive programs is:a. Backup copies of the diskettesb.Passwords for each of the usersc. Disasterrecovery proceduresd. Record counts of the number of input transactions ina batch being processed 165. Checklists, systems development methodology, and staff hiringare examples of what type of controls?a. Detective b.Preventivec. Subjectived. Corrective 166. When an on-line, real-time (OLRT) computer-based processingsystem is in use, internal control can be strengthened bya. Providing for the separation of duties betweenkeypunching and error listing operationsb. Attaching plastic file protection rings to reels ofmagnetic tape before new data can be entered onthe

filec.Making a validity check of an identification numberbefore a user can obtain access to the computer filesd. Preparing batch totals to provide assurance that fileupdates are made for the entire input 167. When auditing "around" the computer, the independent auditorfocuses solely upon the source documents anda. Test datab. CBIS processingc. Control techniquesd.CBIS output 168. One of the features that distinguishes computer processingfrom manual processing isa.Computer processing virtually eliminates theoccurrence of computational error normallyassociated with manual processingb. Errors or fraud in computer processing will bedetected soon after their occurrencesc. The potential for systematic error is ordinarily greaterin manual processing than in computerizedprocessingd. Most computer systems are designed so thattransaction trails useful for audit purposes do notexist 169. Given the increasing use of microcomputers as a means foraccessing data bases, along with on-line real-time processing,companies face a serious challenge relating to data security.Which of the following is not an appropriate means for meetingthis challenge?a. Institute a policy of strict identification and passwordcontrols housed in the computer software that permitonly specified individuals to access the computerfiles and perform a given function.b. Limit terminals to perform only certain transactions.c. Program software to produce a log of transactionsshowing date, time, type of transaction, and operator.d.Prohibit the networking of microcomputers and donot permit users to access centralized data bases. 170. What type of computer-based system is characterized by datathat are assembled from more than one location and recordsthat are updated immediately? a. Microcomputer systemb. Minicomputer systemc. Batch processing systemd.Online real-time system 171. Company A has recently converted its manual payroll to acomputer-based system. Under the old system, employeeswho had resigned or been terminated were occasionally kepton the payroll and their checks were claimed and cashed byother employees, in collusion with shop foremen. Thecontroller is concerned that this practice not be allowed tocontinue under the new system. The best control forpreventing this form of "payroll padding" would be toa. Conduct exit interviews with all employees leavingthe company, regardless of reason.b. Require foremen to obtain a signed receipt from eachemployee claiming a payroll check.c.Require the human resources department toauthorize all hires and terminations, and to forward acurrent computerized list of active employeenumbers to payroll prior to processing. Program thecomputer to reject inactive employee numbers.d. Install time clocks for use by all hourly employees.

172. Compared to a manual system, a CBIS generally1) Reduces segregation of duties2) Increases segregation of duties3) Decreases manual inspection of proce ssing results4) Increases manual inspection of processing results.a.1 and 3b. 1 and 4c. 2 and 3d. 2 and 4 173. One of the major problems in a CBIS is that incompatiblefunctions may be performed by the same individual. Onecompensating control for this is the use ofa. Echo checksb. A selfchecking digit systemc. Computer generated hash totalsd. A computer log 174. Which of the following processing controls would be mosteffective in assisting a store manager to ascertain whether thepayroll transaction data were processed in their entirety? a. Payroll file header recordb. Transaction identification codesc.Processing control totalsd. Programmed exception reporting 175. An organizational control over CBIS operations isa. Run-torun balancing of control totalsb. Check digit verification of unique identifiersc.Separation of operating and programming functionsd. Maintenance of output distribution logs

176. Which of the following methods of testing application controlsutilizes a generalized audit software package prepared by theauditors?a.Parallel simulationb. Integrated testing facility approachc. Test data approachd. Exception report tests

177. An unauthorized employee took computer printouts from outputbins accessible to all employees. A control which would haveprevented this occurrence isa. A storage/retention controlb. A spooler file controlc. An output review controld. A report distribution control 178. Which of the following is a disadvantage of the integrated testfacility approach?a. In establishing fictitious entities, the auditor may becompromising audit independence.b.Removing the fictitious transactions from the systemis somewhat difficult and, if not done carefully, maycontaminate the client's files.c. ITF is simply an automated version of auditing"around" the computer.d. The auditor may not always have a current copy ofthe authorized version of the client's program.

179. Totals of amounts in computer-record data fields which are notusually added for other purposes but are used only for dataprocessing control purposes are calleda. Record totalsb.Hash totalsc. Processing data totalsd. Field totals 180. A hash total of employee numbers is part of the input to apayroll master file update program. The program compares thehash total to the total computed for transactions applied tothe master file. The purpose of this procedure is to:a. Verify that employee numbers are validb. Verify that only authorized employe es are paidc. Detect errors in payroll calculationsd.Detect the omission of transaction processing

181. Matthews Corp. has changed from a system of recording timeworked on clock cards to a computerized payroll system inwhich employees record time in and out with magnetic cards.The CBIS automatically updates all payroll records. Becauseof this changea. A generalized computer audit program must be usedb.Part of the audit trail is alteredc. The potential for payroll related fraud is diminishedd. Transactions must be processed in batches 182. Generalized audit software is of primary interest to the auditorin terms of its capability toa. Access information stored on computer filesb. Select a sample of items for testingc. Evaluate sample test resultsd. Test the accuracy of the client's calculatio ns 183. Accounts payable program posted a payable to a vendor notincluded in the on-line vendor master file. A control whichwould prevent this error is aa.Validity checkb. Range checkc. Reasonableness testd. Parity check 184. In a computerized sales processing system, which of thefollowing controls is most effective in preventing sales invoicepricing errors?a. Sales invoices are reviewed by the productmanagers before being mailed to customersb.Current sales prices are stored in the computer, and,as stock numbers are entered from sales orders, thecomputer automatically prices the ordersc. Sales prices, as well as product numbers, areentered as sales orders are entered at remoteterminal locationsd. Sales prices are reviewed and updated on aquarterly basis 185. Which of the following is likely to be of least importance to anauditor in reviewing the internal control in a company with aCBIS? a. The segregation of duties within the data processingcenter.b. The control over source documentsc. The documentation maintained for accountingapplications.d.The cost/benefit ratio of data processing operations 186. For the accounting system of Acme Company, the amounts ofcash disbursements entered into an CBIS terminal aretransmitted to the computer that immediately transmits theamounts back to the terminal for display on the terminal screen.This display enables the operator toa. Establish the validity of the account numberb.Verify the amount was entered accuratelyc. Verify the authorization of the disbursementd. Prevent the overpayment of the account

187. Which of the following audit techniques most likely wouldprovide an auditor with the most assurance about theeffectiveness of the operation of an internal control procedure? a. Inquiry of client personnelb. Recomputation of account balance amountsc.Observation of client personneld. Confirmation with outside parties 188. Adequate technical training and proficiency as an auditorencompasses an ability to understand a CBIS sufficiently toidentify and evaluatea. The processing and imparting of informationb.Essential accounting control featuresc. All accounting control featuresd. The degree to which programming conforms withapplication of generally accepted accountingprinciples. 189. Which of the following is not a major ...