AUDITING IN A COMPUTERIZED ENVIRONMENT
1. Which statement is incorrect when auditing in a CIS
environment?
a. A CIS environment exists when 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.
b. The auditor should consider how a CIS environment
affects the audit.
c. The use of a computer changes the processing,
storage and communication of financial information
and may affect the accounting and internal control
systems employed by the entity.
d. A CIS environment changes the overall objective and
scope of an audit.
2. Which of the following standards or group of standards is
mostly affected by a computerized information system
environment?
a. General standards
b. Reporting standards
c. Second standard of field work
d. Standards of fieldwork
3. Which of the following is least considered if the auditor has to
determine whether specialized CIS skills are needed in an
audit?
a. The auditor needs to obtain a sufficient
understanding of the accounting and internal control
system affected by the CIS environment.
b. The auditor needs to determine the effect of the CIS
environment on the assessment of overall risk and of
risk at the account balance and class of transactions
level.
c. Design and perform appropriate tests of controls and
substantive procedures.
d. The need of the auditor to make analytical
procedures during the completion stage of audit.
4. It relates to materiality of the financial statement assertions
affected by the computer processing.
a. Threshold
b. Relevance
c. Complexity
d. Significance
5. Which of the following least likely indicates a complexity of
computer processing?
a. Transactions are exchanged electronically with other
organizations without manual review of their
propriety.
b. The volume of the transactions is such that users
would find it difficult to identify and correct errors in
processing.
c. The computer automatically generates material
transactions or entries directly to another
applications.
d. The system generates a daily exception report
6. The nature of the risks and the internal characteristics in CIS
environment that the auditors are mostly concerned include the
following except:
a. Lack of segregation of functions.
b. Lack of transaction trails.
c. Dependence of other control over computer
processing.
d. Cost-benefit ratio.
7. Which of the following is least likely a risk characteristic
associated with CIS environment?
a. Errors embedded in an application’s program logic
maybe difficult to manually detect on a timely basis.
b. Many control procedures that would ordinarily be
performed by separate individuals in manual system
maybe concentrated in CIS.
c. The potential unauthorized access to data or to alter
them without visible evidence maybe greater.
d. Initiation of changes in the master file is exclusively
handled by respective users.
8. Which of the following significance and complexity of the CIS
activities should an auditor least understand?
a. The organizational structure of the client’s CIS
activities.
b. Lack of transaction trails.
c. The significance and complexity of computer
processing in each significant accounting application.
d. The use of software packages instead of customized
software.
9. Which statement is correct regarding personal computer
systems?
a. Personal computers or PCs are economical yet
powerful self-contained general purpose computers
consisting typically of a central processing unit
(CPU), memory, monitor, disk drives, printer cables
and modems.
b. Programs and data are stored only on non-
removable storage media.
c. Personal computers cannot be used to process
accounting transactions and produce reports that are
essential to the preparation of financial statements.
d. Generally, CIS environments in which personal
computers are used are the same with other CIS
environments.
10. A personal computer can be used in various configurations,
including
a. A stand-alone workstation operated by a single user
or a number of users at different times.
b. A workstation which is part of a local area network of
personal computers.
c. A workstation connected to a server.
d. All of the above.
11. Which statement is incorrect regarding personal computer
configurations?
a. The stand-alone workstation can be operated by a
single user or a number of users at different times
accessing the same or different programs.
b. A stand-alone workstation may be referred to as a
distributed system.
c. A local area network is an arrangement where two
or more personal computers are linked together
through the use of special software and
communication lines.
d. Personal computers can be linked to servers and
used as part of such systems, for example, as an
intelligent on-line workstation or as part of a
distributed accounting system.
12. Which of the following is the least likely characteristic of
personal computers?
a. They are small enough to be transportable.
b. They are relatively expensive.
c. They can be placed in operation quickly.
d. The operating system software is less
comprehensive than that found in larger computer
environments.
13. Which of the following is an inherent characteristic of software
package?
a. They are typically used without modifications of the
programs.
b. The programs are tailored-made according to the
specific needs of the user.
c. They are developed by software manufacturer
according to a particular user’s specifications.
d. It takes a longer time of implementation.