CPA Examination Questions -- Systems

1. Which of the following statements most likely represents a disadvantage for an entity that keeps microcomputer-prepared data files rather than manually prepared files?
a. Attention is focused on the accuracy of the programming process rather than errors in individual transactions
b. It is usually easier for unauthorized persons to access and alter the files
c. Random error associated with processing similar transactions in different ways is usually greater
d. It is usually more difficult to cmpare recorded accountability with the physical count of assets

2. The machine language for a specific computer
a. May be changed by the programmer
b. Is the same as all other computer languages
c. Is determined by the engineers who designed the computer
d. Is always alphabetic

3. Misstatements in a batch computer system caused by incorrect programs or data may not be detected immediately because
a. Errors in some transactions may cause rejection of other transactions in the batch
b. The identification of errors in input data typically is not part of the program
c. There are time delays in processing transactions in a batch system
d. The processing of transactions in a batch system is not uniform

4. What type of computer system is characterized by data that are assembled from more than one location and records that are updated immediately?
a. Microcomputer systems
b. Minicomputer systems
c. Batch processing systems
d. Online, real-time systems

5. An auditor anticipates assessing control risk at a low level in a computerized environment. Under these circumstances, on which of the following procedures would the auditor initially focus?
a. Programmed control procedures
b. Application control procedures
c. Output control procedures
d. General control procedures

6. For control purposes, which of the following should be organizationally segregated from the computer operations function?
a. Data conversion
b. Surveillance of console messages
c. Systems development
d. Minor maintenance according to a schedule

7. One of the major problems in a computer system is that incompatible functions may be performed by the same individual. One compensating control is the use of
a. Echo checks
b. A self-checking digit system
c. Computer-generated hash totals
d. A computer log

8. Which of the following activities would most likely be performed in the computer department?
a. Initiation of changes to master records
b. Conversion of information to machine-readable form
c. Correction of transactional errors
d. Initiation of changes to existing applications

9. When disk files are used, the grandfather-father-son updating backup concept is relatively difficult to implement because
a. Locating information points on disks is an extremely time-consuming task
b. Magnetic fields and other environmental factors cause off-site storage to be impracticable
c. Information must be dumped in the form of hard copy if it is to be reviewed before use in updating
d. The process of updating old records is destructive

10. Any assessment of the operational capabilities of a computer system must consider downtime. Even in a fully protected system, downtime will happen because of
a. Electrical power losses
b. Unscheduled maintenance
c. Unauthorized entry
d. Keypunching errors

11. Decision tables differ from program flowcharts in that decision tables emphasize
a. Ease of managability for complex programs
b. Logical relationships among conditions and actions
c. Cost-benefit factors justifying the program
d. The sequence in which operations are performed

12. Mill Co. uses a batch processing method to process its sales transactions. Data on Mill's sales transaction tape are electronically sorted by customer number and are subjected to programmed edit checks in preparing its invoices, sales journals, and updated customer account balances. One of the direct outputs of the creation of this tape most likely would be
a. Report showing exceptions and control totals
b. Printout of the updated inventory records
c. Report showing overdue accounts receivable
d. Printout of the sales price master file

13. In updating a computerized accounts receivable file, which one of the following is used as a batch control to verify the accuracy of posting cash remittances?
a. The sum of net sales
b. The sum of cash deposits minus discounts taken by customers
c. The sum of cash deposits plus discounts taken by customers
d. The sum of net sales plus discounts taken by customers

14. If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll computer application?
a. Hours worked
b. Total debits and credits
c. Net pay
d. Department numbers

15. When erroneous data are detected by computer program controls, such data may be excluded from processing and printed on an error report. This error report should be reviewed and followed up by the
a. Computer operator
b. Systems analyst
c. Data control group
d. Computer programmer

16. In the accounting system of Acme Co., the amounts of cash disbursements entered at a computer terminal are transmitted to the computer, which immediately transmits the amounts back to the terminal for display on the terminal screen. This display enables the operator to
a. Establish the validity of the account number
b. Verify the amount was entered accurately
c. Verify the authorization of the disbursement
d. Prevent the overpayment of the account

17. When an accounting application is processed by computer, an auditor cannot verify the reliable operation of programmed controls by
a. Manually comparing detailed transaction files used by an edit program with the program's generated error listings to determine that errors were properly identified by the edit program
b. Constructing a processing system for accounting applications and processing actual data from throughout the period through both the client's program and the auditor's program
c. Manually reperforming, as of a moment in time, the processing of input data and comparing the simulated results with the actual results
d. Periodically submitting auditor-prepared test data to the same computer process and evaluating the results

18. Which of the following is necessary to audit balances in an online computer system in an environment of destructive updating?
a. Periodic dumping of transaction files
b. Year-end use of audit hooks
c. An integrated test facility (ITF)
d. A well-documented audit trail

19. Which of the following is likely to be least important to an auditor who is considering the internal control structure for the automated data processing fuction?
a. Ancillary program functions
b. Disposition of source documents
c. Operator competence
d. Bit storage capacity

20. After gaining an understanding of a client's computer processing internal control structure, an auditor may decide not to test the effectiveness of the computer processing control procedures. Which of the following is not a valid reason for choosing to omit tests of controls?
a. The controls duplicate operative controls existing elsewhere in the system
b. There appear to be major weaknesses that would preclude assessing control risk at less than the maximum amount
c. The time and dollar costs of testing exceed the time and dollar savings in substantive testing if the tests of controls show the controls to be operative
d. The controls appear effective enough to support a reduced level of control risk

21. Tests of controls in an advanced computer system
a. Can be performed using only actual transactions because testing of simulated transactions is of no consequence
b. Can be performed using actual transactions or simulated transactions
c. Is impractical because many procedures within the computer processing activity leave no visible evidence of having been performed
d. Is inadvisable because it may distort the evidence in the online files

22. When an auditor tests a computerized accounting system, which of the following is true of the test data approach?
a. Test data must consist of all possible valid and invalid conditions
b. The program tested is different from the program used throughout the year by the client
c. Several transactions of each type must be tested
d. Test data are processed by the client's computer programs under the auditor's control

23. To obtain evidence that online access controls are properly functioning, an auditor is most likely to
a. Create checkpoints at periodic intervals after live data processing to test for unauthorized use of the data
b. Examine the transaction log to discover whether any transactions were lost or entered twice because of a system malfunction
c. Enter invalid indentification numbers or passwords to ascertain whether the system rejects them
d. Vouch a random sample of processed transactions to assure proper authorization

24. Which of the following computer-assisted auditing techniques allows fictitious and real transactions to be processed together without the knowledge of client operating personnel?
a. Integrated test facility (ITF)
b. Input controls matrix
c. Parallel simulation
d. Data entry monitor

25. A small client recently put its cash disbursements system on a microcomputer. About which of the following is an auditor most likely to be concerned?
a. Programming of this microcomputer is in BASIC, although COBOL is the dominant standard language for business processing
b. The microcomputer is operated by employees who have other, noncomputer-processing job responsibilites
c. Backup files are stored in another location away from the microcomputer
d. There are restrictions on the amount of data that can be stored and on the length of time that data can be stored

26. Matthews Corp. has changed from a system of recording time worked on clock cards to a computerized payroll system in which employees record time in and out with magnetic cards. The computer system automatically updates all payroll records. Because of this change
a. A generalized computer audit program must be used
b. Part of the audit trail is altered
c. The potential for payroll-related fraud is diminished
d. Transactions must be processed in batches

27. A primary advantage for using generalized audit software (GAS) packages in auditing the financial statements of a client that uses a computer system is that the auditor may
a. Substantiate the accuracy of data through self-checking digits and hash totals
b. Reduce the level of required tests of controls to a relatively small amount
c. Access information stored on computer files without a complete understanding of the client's hardware and software features
d. Consider increasing the use of substantive tests of transactions in place of analytical procedures

28. An auditor is least likely to use computer software to
a. Construct parallel simulations
b. Access client data files
c. Prepare spreadsheets
d. Assess computer control risk

29. The two requirements crucial to achieving audit efficiency and effectiveness with a microcomputer are selecting
a. The appropriate audit tasks for microcomputer applications and the appropriate software to perform the selected audit tasks
b. The appropriate software to perform the selected audit tasks and client data that can be accessed by the auditor's microcomputer
c. Client data that can be accessed by the auditor's microcomputer and audit procedures that are generally applicable to several clients in a specific industry
d. Audit procedures that are generally applicable to several clients in a specific industry and the appropriate audit tasks for microcomputer applications

30. Which of the following audit procedures would an auditor be least likely to perform using generalized audit software (GAS)?
a. Searching records of accounts receivable balances for credit balances
b. Investigating inventory balances for possible obsolescence
c. Selecting accounts receivable for positive and negative confirmation
d. Listing of unusually large inventory balances

31. Smith Co. has numerous customers. A customer file is kept on disk storage. Each customer record contains the name, address, credit limit and account balance. The auditor wishes to test this file to determine whether credit limits are being exceeded. The best procedure for the auditor to follow is to
a. Develop test data that would cause some account balances to exceed the credit limit and determine if the system properly detects such situations
b. Develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit
c. Request a printout of all account balances so they can be manually checked against the credit limits
d. Request a printout of a sample of account balances so they can be individually checked against the credit limits

32. An auditor using audit software probably would be least interested in which of the following fields in a computerized perpetual inventory system?
a. Economic order quantity
b. Warehouse location
c. Date of last purchase
d. Quantity sold

33. Auditors often make use of computer programs that perform routine processing functions, such as sorting and merging. These programs are made available by computer companies and others and are specifically referred to as
a. Compiler programs
b. Supervisory programs
c. Utility programs
d. User programs

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