1. In an automated payroll system, all employees in the finishing department were paid at the rate of $7.45 per hour when the authorized rate was $7.15 per hour. Which of the following controls would have been most effective in preventing such an error?
a. Access controls that would restrict access to the payroll wage rate file to the personnel department
b. A review of all authorized pay rate changes by the foreman in charge of the department
c. The use of batch control totals by department
d. A limit test that compares the pay rates per department with the maximum rate for all employees
2. A deposit for Julie A. Smith at the local bank was inadvertently recorded as a deposit in the account of June A. Smith. The control that would most likely have detected the error in depositing the amount to the wrong account would be:
a. The use of self-checking digits on account numbers
b. Range tests on accounts in which the deposit is related to the size of the account
c. Limit tests
d. Validity tests to determine whether Julie Smith is a valid customer
3. Which of the following independent errors would not be detected by batch controls?
a. The computer operator added a fictitious employee to the processing of the weekly time cards.
b. An employee who worked only 5 hours in the week was paid for 50 hours.
c. The time card for one employee was not processed because it was lost in transit between the payroll department and the data entry function.
d. All of the above.
4. A mail-order retail organization sells complex electronic equipment through its catalogs. Orders are taken over phone lines and transmitted via terminal to the company's main warehouse for processing, shipping, and invoicing. Which of the following would be the most effective control procedure to ensure that proper inventory items are identified and shipped?
a. Require use of self-checking digits on the customer's account number.
b. Require oral verification of part description and price with the customer over the phone.
c. Require sales order personnel to verify that inventory items are on hand by referring to current inventory quantities before processing the order.
d. Require use of batch control totals to reconcile total amount ordered by terminal with total amount recorded in the inventory file for the same period.
5. Which of the following statements are correct regarding access controls:
I. Proper implementation of access controls requires the firm to identify all users and the access they should have to data.
II. Retinal scans cannot be duplicated and thus are the best method to authenticate users.
III. Passwords are the most widely used method of authentication.
a. I
b. I and III
c. II and III
d. I, II, and III
6. Which of the following would not be an appropriate use of GAS?
a. Developing an aging report of accounts receivable
b. Reading a complete master file for an overall integrity review
c. Reading a file to select accounts receivable transactions over $5,000 and over 30 days past due for subsequent audit analysis
d. Generating transactions for submission to an integrated test facility
7. Tagging and tracing would be effective in addressing all of the following audit objectives except:
a. Ensuring that submitted transactions have been fully processed
b. Ensuring that all valid transactions have been submitted for processing
c. Determining that appropriate account balances have been updated
d. Determining that calculations have been made correctly
8. Which of the following procedures is least likely to be performed by an auditor using GAS?
a. Selection and printing of accounts receivable confirmations from a client's master file
b. Evaluation of the audit results based on a statistical sample of inventory
c. Identification and selection of inventory items that have characteristics that the auditor believes indicate obsolete inventory
d. Creation of a detailed printout of a file so that an auditor can read the complete files and select items for audit verification
9. Detailed testing of controls in a computer system through the use of an ITF:
a. Can be performed using simulated transactions
b. Is not convincing because many of the computer controls leave no visible evidence of operation
c. Is likely to contaminate the client's master files and thus should be used only as a last resort
d. Is insufficient unless all controls and elements of processing are identified and tested
10. Which of the following statements is correct regarding the use of computer audit tools in the audit of a company that utilizes e-commerce extensively?
a. Generalized audit software is not likely to be used because it is oriented to testing account balances, not processes.
b. Tagging and tracing can be used but it can only record information about the client's processing.
c. Integrated test facility is ideally suited for e-commerce.
d. All of the above.