Question 1

 Misstatements is 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 processing of transactions in a batch system is not uniform
c. There are time delays in processing transactions in a batch system.
d. The identification of errors in input data typically is not part of the program.
Response: c

Question 2
 The following are risks specific to IT environments, except
a. Increased human involvement
b. Reduced segregation of duties
c. Loss of data due to insufficient backup
d. Reliance on the functioning capabilities of hardware and software.
Response: a

Question 3
 Which of the following is usually not a factor to consider in designing and implementing an online, real-time system?
a. Interrupts
b. Hardware diagnostics
c. Priority allocation
d. Queues
Response: d

Question 4
 Which of the following is an advantage of a database management system (DBMS)?
a. Data independence from application programs.
b. An increased opportunity to apply statistical sampling techniques to account balances.
c. A decreased vulnerability as the DBMS has numerous security controls to prevent disasters.
d. Each organization unit takes responsibility and control for its own data.
Response: a

Question 5
 The two important characteristics of a database system are
a. The DBMS and data independence
b. The database and the Database Management System (DBMS)
c. Data sharing and data independence
d. The DBMS and data sharing
Response: a

Question 6
 A file server in a local area network (LAN) is
a. A device that connects the LAN to other networks.
b. A workstation that is dedicated to a single user on the LAN.
c. A computer that stores programs and data files for users of the LAN.
d. The cabling that physically interconnects the nodes of the LAN.
Response: c

Question 7
 A CIS where two or more personal computers are linked together through the use of special software and communication
lines and allows the sharing of application software, data files, and computer peripherals such as printers and optical
scanners is a/an
a. Batch processing system
b. Wide area network (WAN)
c. Local area network (LAN)
d. On-line system
Response: c

Question 8
 Which of the following computer hardware elements is not associated with data input?
a. Printer
b. Mouse
c. Optical scanner
d. Touch screen
Response: a

Question 9
 What type of online computer system is characterized by data that are assembled from more than one location and records
that are updated immediately?
a. Online, inquiry system
b. Online, downloading/uploading system
c. Online, batch processing system
d. Online, real-time processing system
Response: d

Question 10
 Online computer systems use workstations or terminals that are located either locally or at remote sites. There are two
types of workstations: general purpose terminals and special purpose terminals. General purpose terminals include the
following except
a. Point of sale devices
b. Intelligent terminal
c. Basic keyboard and monitor
d. Personal computers.
Response: a

Question 11
 A computer information system (CIS) environment exists when
a. Only a personal computer is involved in the processing by the entity of financial information of significance to the audit,
whether that computer is operated by the entity or by a third party.
b. A computer of any type or size is involved in the processing by the entity of financial information of significance to the
audit, whether that computer is operated by the entity or by a third party.
c. A computer of any type or size is involved in the processing by the entity of financial information of significance to the
audit, only if that computer is operated by the entity.
d. A computer of any type or size is involved in the processing by the entity of financial information of significance to the
audit, only if that computer is operated by a third party.
Response: b

Question 12
 An affordable yet powerful self-contained general purpose computer which consists typically of a central processing unit
(CPU), monitor, keyboard, disk drives, printer cables, and modem is a/an
a. On-line computer
b. Terminal
c. Personal computer
d. Mainframe
Response: c

Question 13
 A collection of data that is shared and used by a number of different users for different purposes is a
a. File
b. Record
c. Database
d. Memory
Response: c

Question 14
 Regardless of the nature of an entity’s information system, the auditor must consider internal control. In a CIS environment,
the auditor must, at a minimum, have
a. A background in programming procedures
b. A sufficient knowledge of the computer information system.
c. An expertise in computer systems analysis.
d. A sufficient knowledge of the computer’s operating system
Response: b
Question 15
 Which of the following statements concerning the internet is incorrect?
a. The internet is a worldwide network that allows entities to engage in e-commerce/e-business activities.
b. The internet is a shared public network that enables communications with other entities and individuals around the world.
c. The internet is a private network that only allows access to authorized persons or entities.
d. The internet is interoperable, which means that any computer connected to the internet can communicate with any other
computer connected to the internet.
Response: c

Question 16
 In a computer system, the parts of the operating system program and language translator program are store in the
a. Magnetic tape drive
b. Magnetic disk drive
c. Read only memory (ROM)
d. Random access memory (RAM)
Response: c

Question 17
 An auditor who wishes to trace data through several application programs should know what programs use the data, which
files contain the data, and which printed reports display the data. In database system, the information could be found in a.
a. Database schema
b. Data encryptor
c. Decision table
d. Data dictionary
Response: d

Question 18
 The use of a computer changes the processing, storage, and communication if financial information. A CIS environment
may affect the following, except
a. The specific procedures to obtain knowledge of the entity’s accounting and internal control systems.
b. The accounting and internal control systems of the entity,
c. The overall objective and scope of an audit
d. The auditor’s design and performance of tests of control and substantive procedures to satisfy the audit objectives.
Response: c

Question 19
 Which of the following features is least likely to be found in an online, real-time processing system?
a. Preformatted screens
b. Automatic error correction
c. Turnaround documents
d. User manual
Response: c

Question 20
 Most personal computers have both a CD-ROM drive and a hard drive. The major difference between the two types of
storage is that a hard disk
a. Is suitable for an online system, whereas a CD-ROM is not.
b. Is a direct-access storage medium, whereas a CD-ROM is a sequential-assess storage medium.
c. Provides an automatic audit trail, whereas a CD-ROM does not.
d. Has a much larger storage capacity than a CD-ROM.
Response: b

Question 21
 Audit team members can use the same database and programs when their PCs share a hard disk and printer on a LAN.
Which of the following communication devices enables a PC to connect to a LAN?
a. An internal modem that plugs into the motherboard.
b. An external modem with a cable connection to a serial port.
c. A network interface card (NIC) that plugs into the motherboard.
d. A fax modem that sends signals through telephone lines.
Response: a
Question 22
 A hardware element that takes the computer’s digital information and transforms it into signals that can be sent over
ordinary telephone lines is a/an
a. Terminal emulator
b. Modem
c. Intelligent terminal
d. Point-of-sale terminal
Response: b

Question 23
 Workstations or terminals are an integral component of online computer systems. Which of the following statements
concerning workstations is incorrect?
a. Workstations may be used by different users, for different purposes, in different locations, all at the same time.
b. Workstations may be located either locally or at remote sites
c. Both local and remote workstations require the use of telecommunications to link them to the main computer.
d. Local workstations are connected directly to the main computer through cables
Response: c

Question 24
 Which of the following computer software is used to create, maintain, and operate a database?
a. Database administrator
b. Application software
c. Systems software
d. Database management system (DBMS)
Response: d

Question 25
 To protect the integrity of the database, data sharing by different users requires organization, coordination, rules and
guidelines. The individual responsible for managing the database resource is the
a. CIS Manager
b. Programmer
c. Data administrator
d. User
Response: c

Question 26
 In planning the portions of the audit which may be affected by the client’s CIS environment, the auditor should obtain an
understanding of the significance and complexity of the CIS activities and the availability of data for use in the audit. The
following relate to the complexity of CIS activities except when
a. Material financial statement assertions are affected by the computer processing.
b. The volume of transactions is such that users would find it difficult to identify and correct errors in processing.
c. Transactions are exchanged electronically with other organizations (for example, in electronic data interchange system
[EDI])
d. Complicated computations of financial information are performed by the computer and/or material transactions or entities
are generated automatically without independent validation.
Response: c

Question 27
 Which of the following is not a hardware element in a CIS environment?
a. Application programs
b. Modems
c. Scanners
d. CD-ROM drive
Response: a

Question 28
 The auditor shall consider the entity’s CIS environment in designing audit procedures to reduce risk to an acceptably low
level. Which of the following statements is incorrect?
a. The methods of applying audit procedures to gather audit evidence are not influenced by the methods of computer
processing.
b. The auditor may use either manual audit procedures, computer-assisted audit technique (CAATS), or a combination of
both to obtain sufficient appropriate audit evidence.
c. The auditor’s specific audit procedures do not change whether financial information is processed manually or by
computer.
d. In some CIS environments, it may be difficult or impossible for the auditor to obtain certain data for inspection, inquiry, or
confirmation without the aid of a computer.
Response: a

Question 29
 Which of the following is the greatest advantage of a database system?
a. Conversion to a database system is inexpensive and can be accomplished quickly.
b. Data redundancy can be reduced
c. Backup and recovery procedures are minimized.
d. Multiple occurrences of data items are useful for consistency checking
Response: b

Question 30
 A characteristic that distinguishes compute processing from manual processing is
a. The potential for systematic error is ordinarily greater in manual processing than in computerized processing.
b. Computer processing virtually eliminates the occurrence of computational errors normally associated with manual
processing.
c. Errors and fraud in computer processing will be detected soon after their occurrences.
d. Most computer systems are designed so that transaction trails useful for audit purposes do not exist.
Response: a

Question 31
 A computer information system that allows individual users to develop and execute application programs, enter and process
data, and generate reports in a decentralized manner is called a/an
a. Batch processing system
b. End-user computing
c. Online system
d. Networking
Response: b

Question 32
 Which of the following is usually a benefit of transmitting transactions in an electronic data interchange (EDI) environment?
a. An increased opportunity to apply statistical sampling techniques to account balances.
b. A reduced need to test computer controls related to sales and collections transactions.
c. A compressed business cycle with lower year-end receivables balances.
d. No need to rely on third-party service providers to ensure security.
Response: c

Question 33
 Which of the following statements most likely represents a disadvantage for an entity that maintains data files on personal
computers (PCs) rather than manually prepared files?
a. It is usually easier for unauthorized persons to access and alter the files.
b. It is usually more difficult to compare recorded accountability with the physical count assets.
c. Random error associated with processing similar transactions in different ways is usually greater.
d. Attention is focused on the accuracy of the programming process rather than errors in individual transactions.
Response: a

Question 34
 Uninterruptible power supplies are used in computer facilities to minimize the risk of
a. Crashing disk drive read-write heads
b. Losing data stored in main memory
c. Dropping bits in data transmission
d. Failing to control concurrent access to data
Response: b

Question 35
 The following are benefits of using IT-based controls, except
a. Ability to replace manual controls with computer-based controls.
b. Reduction in misstatements due to consistent processing of transactions.
c. Ability to process large volume of transactions.
d. Over-reliance on computer-generated reports.
Response: d