Advanced Auditing
Midterm Exam
Course Introduction
Advanced Auditing delves into the complex principles, procedures, and practices integral to the auditing profession beyond the foundational level. This course explores specialized audit topics such as risk assessment, internal controls, forensic auditing, audit evidence, and advanced sampling techniques. Emphasis is placed on regulatory frameworks, ethical considerations, and the application of professional auditing standards in diverse industries. Students will engage with contemporary issues, case studies, and emerging technologies influencing audit practice, preparing them to handle complex audit assignments and decision-making in dynamic environments.
Recommended Textbook
Information Technology Auditing 4th Edition by James Hall
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12 Chapters
1122 Verified Questions
1122 Flashcards
Source URL: https://quizplus.com/study-set/1104
Page 2
Chapter 1: Auditing and Internal Control
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100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/21726
Sample Questions
Q1) The external auditor is responsible for establishing and maintaining the internal control system.
A)True
B)False
Answer: False
Q2) Explain the purpose of the PCAOB
Answer: The PCAOB is empowered to set auditing, quality control, and ethics standards; to inspect registered accounting firms; to conduct investigations; and to take disciplinary actions.
Q3) Attestation services require all of the following except
A) written assertions and a practitioner's written report
B) the engagement is designed to conduct risk assessment of the client's systems to verify their degree of SOX compliance
C) the formal establishment of measurements criteria
D) the engagement is limited to examination, review, and application of agreed-upon procedures
Answer: B
Q4) Locking petty cash in a safe is an example of __________________________.
Answer: access controls
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Chapter 2: Auditing IT Governance Controls
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91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/21727
Sample Questions
Q1) The least important item to store off-site in case of an emergency is
A) backups of systems software
B) backups of application software
C) documentation and blank forms
D) results of the latest test of the disaster recovery program
Answer: D
Q2) Commodity IT assets easily acquired in the marketplace and should be outsourced under the core competency theory.
A)True
B)False
Answer: False
Q3) In a computer-based information system, which of the following duties needs to be separated?
A) program coding from program operations
B) program operations from program maintenance
C) program maintenance from program coding
D) all of the above duties should be separated
Answer: D
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4
Chapter 3: Auditing Operating Systems and Networks
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105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/21728
Sample Questions
Q1) A ping signal is used to initiate
A) URL masquerading
B) digital signature forging
C) Internet protocol spoofing
D) a smurf attack
E) none of the above is true
Answer: D
Q2) What are some typical problems with passwords?
Answer: users failing to remember passwords; failure to change passwords frequently; displaying passwords where others can see them; using simple, easy-to-guess passwords
Q3) Explain the function of the two parts of the TCP/IP protocol.
Answer: The two parts of the TCP/IP protocol are the transfer control protocol (TCP) and the Internet protocol (IP). This controls how individual packets of data are formatted, transmitted, and received. The TCP supports the transport function of the OSI (Open System Interface) model that has been adopted by the International Standards Organization for the communication community. This ensures that the full message is received. The IP component provides the routing mechanism. It contains a network address and is used to route messages to their destinations.
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Page 5
Chapter 4: Auditing Database Systems
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100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/21729
Sample Questions
Q1) In a relational database
A) the user's view of the physical database is the same as the physical database
B) users perceive that they are manipulating a single table
C) a virtual table exists in the form of rows and columns of a table stored on the disk
D) a programming language (COBOL) is used to create a user's view of the database
Q2) The data definition language
A) identifies, for the database management system, the names and relationships of all data elements, records, and files that comprise the database
B) inserts database commands into application programs to enable standard programs to interact with and manipulate the database
C) permits users to process data in the database without the need for conventional programs
D) describes every data element in the database
Q3) Time stamping is a control that is used to ensure database partitioning.
A)True
B)False
Q4) What is the internal view of a database?
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Chapter 5: Systems Development and Program Change
Activities
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) List three methods used to control the source program library.
Q2) Which statement is not correct? The structured design approach
A) is a top-down approach
B) is documented by data flow diagrams and structure diagrams
C) assembles reusable modules rather than creating systems from scratch
D) starts with an abstract description of the system and redefines it to produce a more detailed description of the system
Q3) Aspects of project feasibility include all of the following except
A) technical feasibility
B) economic feasibility
C) logistic feasibility
D) schedule feasibility
Q4) Which is not a level of a data flow diagram?
A) conceptual level
B) context level
C) intermediate level
D) elementary level
Q5) Describe a risk associated with the phased cutover procedure for data conversion.
Q6) Explain the role of accountants in the conceptual design stage.
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Chapter 6: Transaction Processing and Financial Reporting
Systems Overview
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98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/21731
Sample Questions
Q1) Give a brief description of each of the following documentation techniques: systems flowchart, and program flowchart.
Q2) Why do many firms no longer use a general journal? What has taken its place?
Q3) Processing more transactions at a lower unit cost makes batch processing more efficient than real-time systems.
A)True
B)False
Q4) List two duties that the general ledger clerk should not perform.
Q5) What is destructive update?
Q6) Directing work-in-process through its various stages of manufacturing is part of the conversion cycle.
A)True
B)False
Q7) Documents that are created at the beginning of the transaction are called __________________________.
Q8) Name four documentation techniques.
Q9) Why is the audit trail necessary?
Q10) What are the reasons companies use coding schemes in their accounting Page 8
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Page 9
Chapter 7: Computer Assisted Audit Tools and Techniques
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82 Verified Questions
82 Flashcards
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Sample Questions
Q1) The firm allows no more than 10 hours of overtime a week. An employee entered "15" in the field. Which control will detect this error?
Q2) If all of the inputs have been validated before processing, then what purpose do run-to-run controls serve?
Q3) The three groups of application controls are batch controls, run-to-run controls, and audit trail controls.
A)True
B)False
Q4) All of the following are disadvantages of the test data technique except A) the test data technique requires extensive computer expertise on the part of the auditor
B) the auditor cannot be sure that the application being tested is a copy of the current application used by computer services personnel
C) the auditor cannot be sure that the application being tested is the same application used throughout the entire year
D) preparation of the test data is time-consuming
Q5) Discuss what is involved in creating test data.
Q6) What are the three categories of processing control?
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Chapter 8: Data Structures and Caatts for Data Extraction
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81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/21733
Sample Questions
Q1) Discuss the two fundamental components of data structures.
Q2) The two fundamental components of data structures are organization and access method.
A)True
B)False
Q3) The deletion anomaly in unnormalized databases
A) is easily detected by users
B) may result in the loss of important data
C) complicates adding records to the database
D) requires the user to perform excessive updates
Q4) What are the six phases of view modeling?
Q5) The term occurrence is used to describe the number of attributes or fields pertaining to a specific entity.
A)True B)False
Q6) Give an example of the insertion anomaly.
Q7) View modeling begins by identifying the primary entities of the business function in question.
A)True B)False
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Chapter 9: Auditing the Revenue Cycle
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97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/21734
Sample Questions
Q1) The packing slip is also known as the shipping notice.
A)True
B)False
Q2) Which department is least likely to be involved in the revenue cycle?
A) credit
B) accounts payable
C) billing
D) shipping
Q3) What specific internal control procedure would prevent the sale of goods on account to a fictitious customer?
Q4) What specific internal control procedure would prevent a customer from being billed for all 50 items ordered although only 40 items were shipped?
Q5) Sales orders should be prenumbered documents.
A)True
B)False
Q6) What specific internal control procedure would detect the misplacement of a sales invoice after preparation and not mailed to the customer? The invoice was never found.
Q7) What function does the receiving department serve in the revenue cycle?
Page 12
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Chapter 10: Auditing the Expenditure Cycle
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100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/21735
Sample Questions
Q1) Explain why supervision is so important in the receiving department.
Q2) Explain the purpose of each of the following documents used in the payroll system: the personnel action form, the job ticket, the time card.
Q3) In a merchandising firm, authorization for the purchase of inventory is the responsibility of
A) inventory control
B) purchasing
C) accounts payable
D) cash disbursements
Q4) How does the procedure for determining inventory requirements differ between a basic batch processing system and batch processing with real-time data input of sales and receipts of inventory? What about for the procedures used by the receiving department?
Q5) What is a vouchers payable system and why is it used?
Q6) Why should employee paychecks be drawn against a special checking account?
Q7) Name two major benefits of automating the purchasing effort.
Q8) In a manufacturing firm, employees typically fill out two different documents regarding their time worked. What are they? Why are there two?
Page 13
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Chapter 11: Enterprise Resource Planning Systems
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90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/21736
Sample Questions
Q1) Organizations using ERP systems employ an internal control tool called a role.
A)True
B)False
Q2) Describe the two-tier client server model.
Q3) What is a data warehouse?
Q4) The client/server model is a form of network topology in which user computers, called clients, access ERP programs and data via a host computer called a server.
A)True
B)False
Q5) Companies are more likely to modify an ERP to accommodate the company than to modify company processes to accommodate the ERP.
A)True
B)False
Q6) What should management do to assess the potential benefits from implementing an ERP?
Q7) What is scalability?
Q8) What is data mining?
Q9) How are OLTP and OLAP different? Give examples of their use.
14
Q10) Describe the three-tier client server model.
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Chapter 12: Business Ethics, Fraud, and Fraud Detection
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/21737
Sample Questions
Q1) Define database management fraud.
Q2) Forces which may permit fraud to occur do not include
A) a gambling addiction
B) lack of segregation of duties
C) centralized decision making environment
D) questionable integrity of employees
Q3) Defalcation is another word for financial fraud.
A)True
B)False
Q4) According to common law, there are five conditions that must be present for an act to be deemed fraudulent. Name and explain each.
Q5) Describe the factors that constitute the fraud triangle. Why is it important to auditors?
Q6) Explain the problems associated with Questionable Executive Compensation Schemes
Q7) Distinguish between errors and irregularities. Which are of greatest concern to auditors?
Q8) Discuss what an auditor should look for in testing for payments to fictitious vendors and how ACL can be used to assist the process.
Q9) Explain the characteristics of management fraud. Page 15
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