IT Auditing Practice Exam
Course Introduction
IT Auditing explores the principles, practices, and methodologies used to evaluate and ensure the effectiveness, reliability, and security of information technology systems within organizations. The course covers key topics such as risk assessment, internal controls, regulatory compliance, audit planning, data integrity, cybersecurity frameworks, and the use of auditing tools and techniques. Students gain hands-on experience in conducting IT audits, identifying vulnerabilities, and recommending improvements to align IT processes with organizational objectives and industry standards. This course prepares students for roles in information systems auditing and governance by emphasizing both technical skills and ethical considerations.
Recommended Textbook
Accounting Information Systems 11th Edition by Marshall B. Romney Paul J. Steinbart
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Chapter 1: Accounting Information Systems
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Q1) Regarding decision scope,which statement below is true?
A)Operational control is concerned with the effective and efficient use of resources for accomplishing organizational objectives.
B)Management control is concerned with the effective and efficient performance of specific tasks.
C)Strategic planning is concerned with establishing organizational objectives and policies for accomplishing those objectives.
D)There is no real correlation between a manager's level in an organization and his or her decision-making responsibilities.
Answer: C
Q2) The process of creating value for customers is the result of nine activities (five primary and four support)that taken together form a A)value chain.
B)profitable operation.
C)successful business.
D)support system.
Answer: A
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Chapter 2: Overview of Business Processes
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Q1) Which of the following is not one of the four types of file processing?
A)changing
B)updating
C)deleting
D)altering
Answer: D
Q2) What is the major difference between the revenue and the expenditure cycle?
A)The revenue cycle includes marketing activities; the expenditure cycle does not.
B)In the revenue cycle,cash is received; in the expenditure cycle cash is paid out.
C)The expenditure cycle includes paying employees.
D)The revenue cycle includes the activity of obtaining funds from investors.
Answer: B
Q3) The chart of accounts of a corporate retail bookstore would probably include
A)work-in-process inventory.
B)a drawing account.
C)retained earnings.
D)both A and C
Answer: C
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Chapter 3: Systems Development and Documentation Techniques
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Q1) In a payroll processing DFD,the "prepare reports" activity will be represented by __________,the "employee payroll file" will be represented by __________,and the "bank" will be represented by __________.
A)a circle; two horizontal lines; a square
B)a circle; two horizontal lines; two horizontal lines
C)a rectangle; a square; a circle
D)a square; two horizontal lines; a circle
Answer: A
Q2) P 62-63 52)Briefly discuss the various levels of understanding necessary to deal with and comprehend AIS documentation.
Answer: Depending on the job function of the professional,at a minimum a person should be able to read AIS and system documentation.A person may also be called upon to evaluate internal control system documentation in order to identify control strengths and weaknesses as well as recommend improvements.The AIS professional may be engaged to prepare documentation,which requires the greatest amount of skill and understanding of a particular system.
Q3) P62 51)List the various types of flowcharts.
Answer: Document flowcharts,System flowcharts,Program flowcharts,Internal control flowcharts
Page 5
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Chapter 4: Relational Databases
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Q1) Discuss the ways in which a well-designed DBMS will facilitate the three basic functions of creating,changing,and querying data.
Q2) Normalization means tables are in the __________ normal form.
A)first
B)second
C)third
D)fourth
Q3) What is a data dictionary?
Q4) The problem of inability to add new data without violating the basic integrity of the database is referred to as the A)update anomaly.
B)insert anomaly.
C)integrity anomaly.
D)add anomaly.
Q5) Discuss redundancy as it applies to database design.
Q6) List the four languages used within a DBMS.
Q7) Discuss the relational database data model.
Q8) Briefly explain the two advantages semantic data modeling has over normalization when designing a relational database.
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Chapter 5: Computer Fraud and Security
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Q1) Why do fraudulent acts often go unreported and are therefore not prosecuted?
Q2) What is the difference between a worm and a virus?
Q3) Computer fraud can be analyzed using the traditional data processing model.According to this model,the simplest and most common fraud is
fraud.
A)input
B)processor
C)computer instructions
D)output
Q4) How can a system be protected from viruses?
Q5) How can an organization reduce fraud losses?
A)encrypt data and programs
B)use forensic accountants
C)maintain adequate insurance
D)require vacations and rotate duties
Q6) The simplest and most common way to commit a computer fraud is to
A)alter computer input.
B)alter computer output.
C)modify the processing.
D)corrupt the data base.
Q7) What is a computer fraud?
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Chapter 6: Control and Accounting Information Systems
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Q1) What is one reason why AIS threats are increasing?
A)LANs and client/server systems are easier to control than centralized,mainframe systems.
B)Many companies do not realize that data security is crucial to their survival.
C)Computer control problems are often overestimated and overly emphasized by management.
D)Many companies believe that protecting information is a strategic requirement.
Q2) The plan of organization that a business uses to safeguard assets,provide accurate and reliable information,and promote and improve operational efficiency is known as A)a phenomenon.
B)internal control.
C)an AIS threat.
D)a preventive control.
Q3) The audit committee of the board of directors is composed of A)officers of the company.
B)inside directors of the company.
C)outside directors of the company.
D)all of the above
Q4) What is a weakness of the internal control concept of the separation of duties?
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Chapter 7: Infromation System Controls for Systems
Reliability
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Q1) What are the problems with symmetric encryption?
Q2) Murray Snitzel called a meeting of the top management at Snitzel Capital Management.Number one on the agenda was computer system security."The risk of security breach incidents has become unacceptable," he said,and turned to the Chief Information Officer."This your responsibility! What do you intend to do?" Which of the following is the best answer?
A)Evaluate and modify the system using the Trust Services framework
B)Evaluate and modify the system using the COBIT framework.
C)Evaluate and modify the system using the CTC checklist.
D)Evaluate and modify the system using COBOL.
Q3) These are used to create digital signatures.
A)Asymmetric encryption and hashing
B)Hashing and packet filtering
C)Packet filtering and encryption
D)Symmetric encryption and hashing
Q4) Explain social engineering.
Q5) How does an intrusion detection system work?
Page 9
Q6) What three factors determine the strength of any encryption system?
Q7) Explain the value of penetration testing.
Q8) What are three ways users can be authenticated?
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Page 10
Chapter 8: Auditing Computer-Based Information Systems
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Q1) Identify the 10 internationally recognized best practices for protecting the privacy of customers' personal information.
Q2) This compares the results produced by more than one method to verify accuracy.
A)Concurrent update control
B)Cross-footing balance test
C)Data matching
D)Recalculation of batch totals
Q3) Identify four useful procedures for controlling access to system outputs.
Q4) Identify a fundamental control procedure for protecting that confidentiality of sensitive information.
Q5) Batch totals are an example of
A)Data entry controls
B)Data transmission controls
C)Output controls
D)Processing controls
Q6) The goal of information systems controls is
A)To ensure that systems objectives are met.
B)To ensure that systems function
C)To ensure that systems are reliable.
D)To ensure that data are confidential.
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Chapter 9: Auditing Computer-Based Informtion Systems
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Q1) An auditor finds that absentee rates are significantly higher on Mondays and Fridays than on other work days.This is an example collecting audit evidence by
A)confirmation.
B)reperformance.
C)vouching.
D)analytical review.
Q2) Auditing involves the
A)collection,review,and documentation of audit evidence.
B)planning and verification of economic events.
C)collection of audit evidence and approval of economic events.
D)testing,documentation,and certification of audit evidence.
Q3) Briefly describe tests that can be used to detect unauthorized program modifications.
Q4) Discuss the disadvantages of test data processing.
Q5) Which characteristics below is not a characteristic of auditing?
A)evidence collection
B)establishing audit criteria
C)objectivity
D)systems development
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Chapter 10: The Revenue Cycle: Sales an Cash Collections
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Q1) The Squishy Things Toy Company was established in 1948.It recently signed a large contract with a chain of retail toy stores.As a condition of the contract,the Squishy will be required to track and forecast product sales by linking in to the chain's sales database.Squishy will then be responsible for shipping products to the chain's regional warehouses as needed.The technology that is used for communication between Squishy and the chain is
A)vendor-managed inventory.
B)sales force automation.
C)electronic data interchange.
D)optical character recognition.
Q2) Which of the activities listed below is not part of the revenue cycle?
A)sales order entry
B)shipping
C)receiving
D)billing
Q3) In billing and accounts receivable,what documents are commonly used?
Q4) What is cycle billing?
Q5) Why is credit approval an important part of the revenue cycle?
Q6) Discuss the revenue cycle threat of stockouts,carrying costs,and markdowns.
Q7) Name and briefly define the two types of accounts receivable systems.
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Chapter 11: The Expenditure Cycle: Purchasing and Cash Disbursements
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Q1) Define the materials requirement planning (MRP)
Q2) Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?
A)control of physical access to the inventory storage areas
B)transfers of inventory with proper documentation
C)sending "blind" copies of purchase orders to inventory control for data entry
D)making physical counts of inventory at least once per year
Q3) The management at Sad Clown Pajamas,an Internet-based wholesaler,is considering a new inventory control system.The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs.The new system,which will focus on ensuring that orders are placed with sufficient lead time to prevent stockouts,will employ
A)a just-in-time inventory system.
B)the economic order quantity.
C)a reorder point.
D)materials requirements planning.
Q4) a)What is the major cost driver in the purchasing function?
b)How can information technology be used to control this cost driver?
Q5) Briefly discuss the differences among EOQ,MRP,and JIT.
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Chapter 12: The Production Cycle
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Q1) Direct labor must be tracked and accounted for as part of the production process.Traditionally,direct labor was tracked using __________ but an AIS enhancement is to use __________ to record and track direct labor costs.
A)job-time tickets; coded identification cards
B)move tickets; coded identification cards
C)employee earnings records; job-time tickets
D)time cards; electronic time entry terminals
Q2) Activity-based costing (ABC)can refine and improve cost allocations using either job-order or process cost systems.There are three significant differences between ABC and traditional cost accounting approaches.One difference between the two systems is how clearly the results of management activities are measured on overall profitability.This benefit is better known as
A)batch related overhead.
B)improved cost management.
C)product related overhead.
D)improved cost drivers.
Q3) Identify and briefly discuss the two common methods of production planning.
Q4) What are the two major types of cost accounting systems and what are the differences between the two?
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Chapter 13: The Human Resources Managementpayroll Cycle
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Q1) What is a professional employer organization?
Q2) Which one of the following is most likely to be positively correlated with employee morale?
A)Turnover rate
B)Profitability
C)Defect rate
D)Overhead
Q3) The average annual middle-management salary at Folding Squid Technologies is $60,000.If the average turnover rate for middle management is ten employees per year,what is the approximate average annual cost of turnover?
A)$300,000
B)$600,000
C)$900,000
D)$1,200,000
Q4) Payroll deductions fall into the broad categories of __________ and __________.
A)payroll tax withholdings; voluntary deductions
B)unemployment; social security taxes
C)unemployment taxes; income taxes
D)voluntary deductions; income taxes
Q5) List the various ways used to compensate employees. Page 16
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Chapter 14: General Ledger and Reporting System
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Q1) Explain the benefits of XBRL.
Q2) Cheryl Liao is an accountant at Folding Squid Technologies.While making an adjusting entry to the general ledger,she received the following error message,"The account number referenced in your journal entry does not exist.Do you want to create a new account?" This message was the result of a
A)validity check.
B)field check.
C)zero-balance check.
D)completeness test.
Q3) Which of the following techniques is not used in data mining?
A)statistical analysis
B)artificial intelligence
C)expert systems
D)neural networks
Q4) Explain the preparation of financial statements as the third step in the general ledger and reporting system.
Q5) How is a balanced scorecard used to assess organizational performance?
Q6) What is a journal voucher file? What is the purpose of this file?
Q7) What is responsibility accounting?
Page 18
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Chapter 15: Data Modeling and Database Design
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Q1) Comment on the statement,"Accountants can and should participate in all stages of the database design process."
Q2) What is data modeling?
Q3) The REA data model supports both __________ and __________ types of data.
A)financial; nonfinancial
B)logical; physical
C)planning; control
D)traditional; nontraditional
Q4) Assume the cardinalities associated in a relationship all have zero minimums and N maximums.This would be an example of which cardinality rule?
A)agent-event relationship
B)resource-event relationship
C)event-event relationship
D)none of the above relationships
Q5) Which of the following is not one of the five stages of database design?
A)systems analysis
B)conceptual design
C)data modeling
D)implementation
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Chapter 16: Implementing an Rea Model in a Relational Database
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Q1) Concerning tables for M:N relationships,which of the following statements is false?
A)Non-key attributes may be included.
B)Multiple attribute primary keys are used.
C)Single attribute primary keys may be used.
D)Concatenated keys are used.
Q2) An integrated REA diagram merges multiple copies of _______ and ______entities but retains multiple copies of ______ entities.
A)Resource,event,agent
B)Relationship,economic,accounting
C)Resource,economic,agent
D)Relationship,event,accounting
Q3) How many tables are needed to implement an REA data model that has five distinct entities,two M:N relationships and three 1:N relationships in a relational database? A)5
Q4) Explain a completeness check.
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Chapter 17: Special Topics in Rea Modeling
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Q1) The cardinality pair from the Order Goods event back to the Request Goods event also has a ___ minimum and ___ maximum.
A)0,1
B)0,N
C)1,N
D)N,M
Q2) An REA diagram for the production cycle,models the relationships between the Job Operations event and the Job Operations List entity,and between the Machine Operations event and the Machine Operations List entity,as being (respectively)
A)1:1; 1:1
B)1:N; 1:N
C)M:N; M:N
D)1:N; M;N
Q3) Why might an REA diagram show relationships between agents?
Q4) Supplier number is most likely to be a foreign key in:
A)Inventory-Request_Goods
B)Receive Goods
C)Supplier
D)Warehouse
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Chapter 18: Introduction to Systems Development and Systems Analysis
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Q1) What is economic feasibility analysis? What techniques are used in economic feasibility analysis?
Q2) A federal law demands that certain information about foreign customers should be maintained in the information system.In which part of a feasibility study should this requirement be considered?
A)economic feasibility
B)legal feasibility
C)operational feasibility
D)technical feasibility
Q3) Identify and briefly discuss the points at which a "go/no go" decision is made in the systems analysis process.
Q4) When using the payback method to determine economic feasibility of projects,the company usually accepts the project with the
A)longest payback period.
B)mid-range payback period.
C)payback period that is equal to the project's economic life.
D)shortest payback period.
Q5) Identify the main reasons why companies change existing systems?
Q6) What is the physical design stage of the systems development life cycle?
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Chapter 19: Ais Development Strategies
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Q1) The approaches to evaluating proposals that do not incorporate dollar estimates of costs and benefits is known as
A)benchmark problem and point scoring.
B)point scoring and requirement costing.
C)requirement costing and point scoring.
D)All methods mentioned above include dollar estimates.
Q2) In which approach to systems acquisition is "inexpensive updates" considered an advantage?
A)canned software
B)custom software
C)modified software
D)turnkey software and systems
Q3) The basic premise of __________ is that it is easier for people to express what they like or dislike about an existing system than to imagine what they would like in a system.
A)modified software
B)outsourcing agreements
C)prototyping
D)turnkey systems
Q4) Briefly identify the difficulties encountered when developing an AIS.
Page 23
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Chapter 20: Systems Design, Implementation and Operation
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Q1) What is the conceptual systems design phase? What are the elements of conceptual design specifications?
Q2) Who is responsible for evaluating the design alternatives and selecting the one that best meets the organization's needs?
A)design team
B)implementation committee
C)steering committee
D)systems analysts
Q3) Once a design alternative has been chosen,the project team is responsible for the development of several conceptual design elements.A decision about how often to produce a certain report falls under the category of which design element?
A)data storage
B)input
C)output
D)processing procedures and operations
Q4) What is the purpose of a conceptual systems design report?
Q5) What are the different approaches to system conversion?
Q6) What are the eight basic steps used to develop and test software programs?
Q7) Briefly discuss structured programming.
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