EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Chapter 11, Problem 21.2MCQ
To determine
Identify an example of application control.
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Which of the following would reduce the effectiveness of internal control in an accountinginformation system?a. The computer librarian maintains custody of computer program instructions and detailed lists.b. Computer operators have access to operator instructions and detailed program lists.c. The control group is solely responsible for the distribution of all computer output.d. Computer programmers write and debug programs that perform routines designed by thesystems analyst.
Consider the following list of internal controls.
For each control classify it either as a preventive control or a detective control. Also classify each control as either a manual control, an
IT dependent manual control, at IT application control, or a IT general control.
a.
b.
C.
d.
e.
Software will not allow a sale to be processed to a
customer that has exceeded its credit limit.
Personnel responsible for running computer programs
are prevented from accessing and changing computer
software.
Computer software generates a daily report of all
shipping documents (bills of lading) that have not
resulted in a sales invoice.
An accounting clerk follows-up on a computer-generated
report of all shipping documents (bills of lading) that have
not resulted in a sales invoice, to determine if an invoice
should be generated.
An accounting employee performs a monthly bank
reconciliation.
Is the following a potential control weakness?
Most data input in Marco Inc. is backed up by paper trails of source documents and other business papers. In addition, the firm uses an Internet service to back up all files on the Internet. Marco manually runs a backup at the end of each day. They have no other Internet presence other than an informational Website that does not allow potential customers to order merchandise.
Briefly explain the potential mistatement and recommended correction.
Chapter 11 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
Ch. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 10RQ
Ch. 11 - Prob. 11RQCh. 11 - Prob. 12RQCh. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQCh. 11 - Prob. 16RQCh. 11 - Prob. 17RQCh. 11 - Prob. 18RQCh. 11 - Prob. 19RQCh. 11 - Prob. 20.1MCQCh. 11 - Actions, policies, and procedures that reflect the...Ch. 11 - Prob. 20.3MCQCh. 11 - Prob. 21.1MCQCh. 11 - Prob. 21.2MCQCh. 11 - Prob. 21.3MCQCh. 11 - Which of the following correctly describes an...Ch. 11 - Prob. 22.2MCQCh. 11 - Prob. 22.3MCQCh. 11 - Following are descriptions of ten internal...Ch. 11 - Prob. 24DQPCh. 11 - The following are misstatements that have occurred...Ch. 11 - Prob. 26DQPCh. 11 - Prob. 27DQPCh. 11 - Prob. 28DQPCh. 11 - Prob. 29DQPCh. 11 - Prob. 30DQPCh. 11 - Prob. 32C
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- Increasing use of sophisticated EDP systems has produced significant changes in the accounting environment. Some of these changes are the following: documents that are used to enter information into the computer may exist for only a short time or only in computer-readable form. In some computer systems, input documents may not exist at all, because information is entered directly into the system. Computer processing uniformly subjects like transactions to the same processing instructions. Many internal control procedures, once performed by separate individuals in manual systems, may be combined in systems that use computer processing. The potential for individuals to gain unauthorized access to data or assets may be greater in computerized accounting systems than in manual systems. Required: For each of the changes, discuss the impact on the internal control system and the independent audit.arrow_forwardWhich of the following is a risk to the financial statement of a company when it places a purchase order with a supplier? The advantages of PDF files are: A. that they can be securely locked so that the figures cannot be changed.B. that they can be easily manipulated and changed by users.C. the software to produce them is very cheap.D. none of the options are correct. 2. What is information overload? A. The situation where a computer has more information than is needed or is able to be processed in a meaningful way when a computer program is executed.B. The situation where an individual has more information than is needed or is able to be processed in a meaningful way when working through a decision.C. The situation where a computer has more information than is needed or is able to be processed when data storage is taking place.D. The situation where the amount of information exceeds the storage capacity of the brain of a human being. 3. When all data are stored in a central place,…arrow_forwardIs the following a potential control weakness? A computer network and personal computers support Marco accounting and inventory management systems. Personal computers are located in the offices and warehouse and a central server handles all accounting and inventory files. Printers are located in areas where employees need printed documents and other records routinely. The computer is used to control and process most transactions, to print documents, prepare accounting records, and prepare periodic financial statements. Marco uses commercial software recommended by their auditor. To date, they have had only the usual startup problems. They have used it for two years and have upgraded it once. Briefly explain the potential mistatement and recommended correction.arrow_forward
- 3. Which of the following is not a computer facility control? (a) Place the data processing center where unauthorized individuals cannot gain entry to the facility. (b) Limit access to the data processing center all employees of the company. (c) Buy insurance to protect against loss of equipment in the computer facility. (d) Use advanced technology to identify individuals who are authorized access to the data processing center. 4.For internal control over computer program changes, a policy should be established requiring that: (a) All proposed changes be approved by a responsible individual and logged. (b) The programmer designing the change should be responsible for ensuring that the revised program is adequately tested. (c) All program changes be supervised by the information system control group. (d) To facilitate operational performance, superseded portions of programs should not be deleted from the program run manual.arrow_forward3. Which of the following is not a computer facility control? (a) Place the data processing center where unauthorized individuals cannot gain entry to the facility. (b) Limit access to the data processing center all employees of the company. (c) Buy insurance to protect against loss of equipment in the computer facility. (d) Use advanced technology to identify individuals who are authorized access to the data processing center. 4.For internal control over computer program changes, a policy should be established requiring that: (a) All proposed changes be approved by a responsible individual and logged. (b) The programmer designing the change should be responsible for ensuring that the revised program is adequately tested. (c) All program changes be supervised by the information system control group. (d) To facilitate operational performance, superseded portions of programs should not be deleted from the program run manual. 5. Auditing "around the computer": (a) Assumes that accurate…arrow_forwardWhich of the following is false about accounting information systems? A. They provide reports that people analyze. B. They prevent errors and stop employees from stealing inventory. C. They are designed to gather data about the companys transactions. D. They consist of processes that involve input of data from source documents, processing, output, and storage.arrow_forward
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