Disclosure of confidential information is one risk associated with information
technology. Which of the following would be considered confidential information?
A. The stock price of Microsoft
B. The book value of Disney Corporation’s fixed assets
C. The social security numbers of GE’s board of directors
D. All of these are examples of confidential information.
Which of the following questions best relates to a macro-level factor for choosing
information technology for the accounting information system?
A. What will the technology cost?
B. Should we borrow money to purchase the technology?
C. How many employees will have to learn to use the new system?
D. All of these relate to macro-level factors.
AIS is an important area of study for future accountants because a well-designed AIS
can recognize and adapt to the cost-benefit constraint. Which of the following
statements is most true?
A. Nonfinancial costs and benefits are less important than financial costs and benefits in
designing an AIS.
B. Resistance to change is a potential cost when making changes to the AIS.
C. Financial statement users benefit from more information when it comes from the
AIS.
D. Source documents should be electronic, rather than paper-based, because electronic
documents are more cost effective.
Consider the following diagram as you answer the questions:
Frodo and Gandalf are current employees. Frodo has participated in no instances of
Event B, while Gandalf has participated in at least five. Which of the following
statements is most true?
A. The primary key from the “employee” table will be the primary key of the “Event B”
table.
B. The primary key from the “Event B” table will be the primary key of the “employee”
table.
C. The primary key from the “Event B” table will be a foreign key in the “employee”
table.
D. The primary key from the “employee” table will be a foreign key in the “Event B”
table.
Consider the following examples of computer crime as you answer the question:
i. Social Security numbers are stolen from a company’s database.
ii. A fraudster uses a computer to identify people over the age of 80 with annual
incomes of $250,000 or more.
iii. A supervisor receives threats from a worker via e-mail; the worker demands
promotion as a condition of not exposing the supervisor’s illegal acts.
iv. An unhappy customer launches a denial-of-service attack.
Which two items represent the same category of risk from the list discussed in the
chapter?
A. I and II
B. I and III
C. II and IV
D. None of these
All of the following are changes associated with the Audit Clarity Project except:
A. the audit report.
B. terminology.
C. format.
D. ensuring that US standards are adopted worldwide.
Consider the following set of flowcharting symbols along with the case as you respond
to the question:
When the CEO of NTL Corporation resigned, the board of directors hired a recruitment
firm to look for a replacement. The recruitment firm prepared several job
announcements, then presented them to the board of directors. The board of directors
approved one of the job announcements; the recruitment firm used it to advertise the
position on the Internet and in relevant newspapers and professional publications. After
receiving several applications, the recruitment firm selected a pool of ten to pass on to
NTL’s board of directors. The board of directors, with the assistance of the recruitment
firm, went through three rounds of interviews, narrowing the pool from ten to three.
Each of the three finalists prepared a presentation on the strategic future of NTL and
delivered the presentation at a meeting of NTL shareholders. The board of directors
then made the final choice for a new CEO.
Which symbol is most likely to be used in a systems flowchart to represent the board of
directors narrowing the pool?
A. Symbol B
B. Symbol F
C. Symbol G
D. Symbol I
Which of the following best pairs an element of the COSO enterprise risk management
framework with an example of that element?
A. Control activities, developing a budget for the ERM plan
B. Information and communication, annual management retreats focused on improving
the ERM plan
C. Monitoring, annual management retreats focused on improving the ERM plan
D. Internal environment, posting SEC filings on the company web site
The title of a systems flowchart included the following information: “Systems flowchart
of the inventory purchasing process. Page 1 of 2.” Which of the following would you
expect to see as column headings in the flowchart: (i) supplier, (ii) Page 1, (iii)
purchasing agent.
A. I and II only
B. I and III only
C. II and III only
D. I, II and III
Lenise laid out three potential responses for a violation of her company’s ethics code.
Based on the Langenderfer and Rockness model, what should she do next?
A. Determine who will be affected by each potential response.
B. Speculate about what will happen for each of the three responses.
C. Talk with a trusted co-worker.
D. Determine if her company’s ethics code is based primarily on ethical egoism or some
other school of ethical thought.
In the Audit Clarity Project, requirements:
A. explain what the auditor needs to do to ensure an unmodified report is issued.
B. can serve as a guide for designing specific financial statement audit procedures.
C. Both explain what the auditor needs to do to ensure an unmodified report is issued
and can serve as a guide for designing specific financial statement audit procedures.
D. Neither explain what the auditor needs to do to ensure an unmodified report is issued
nor can serve as a guide for designing specific financial statement audit procedures.
Flowcharts should be read:
A. From top to bottom and from left to right
B. From bottom to top and from left to right
C. From top to bottom and from right to left
D. From bottom to top and right to left
VTR Corporation’s accounting information system recently reported the following
information: Cost of goods sold, $1,500. Inventory, $15,000. Unearned service fees,
$3,000. Service fees earned, $8,000. Which element of financial statements is not
included in the preceding data?
A. Assets
B. Equity
C. Expense
D. Liabilities
Within the context of business process management, the quote “If you don’t know
where you’re going, any road will take you there” is most related to which of the
following?
A. Developing a timeline and outcomes for a BPM project.
B. Preparing a presentation on the nature and importance of BPM for top management.
C. Using a well-established methodology for choosing information technology tools in
a BPM project.
D. None of these.
The purpose of an organization’s conversion process is:
A. To transform raw materials into finished products.
B. To determine if the company should use process costing.
C. Both to transform raw materials into finished products and to determine if the
company should use process costing.
D. Neither to transform raw materials into finished products nor to determine if the
company should use process costing.
The Association of Certified Fraud Examiners offers one- and two-day seminars to its
members throughout the year; members find out about the seminars via the association’s
web site or a catalog mailed on a quarterly basis. Each seminar must have at least ten
registrants, but can have no more than thirty registrants. Association staff process
seminar registrations, which may come in through the mail, over the phone or via the
web site. Payment must be made in advance; the association does not refund
registration fees for “no-shows.” Each seminar has a single speaker who is paid a fixed
fee regardless of the number of attendees; the speaker’s fee is paid at the end of the
seminar. A speaker may present the same seminar multiple times during the year, but
each speaker is focused on a single seminar topic. At the end of each seminar, attendees
receive a signed certificate of completion after they respond to a short quiz based on the
seminar’s content.
Create database specifications (table and field names) for the registration and collection
process. Indicate primary keys by underlining and foreign keys with brackets.
Prepare a
Consider the following case as you respond to the next problem:
The Festival Theatre produces twelve plays per year. Patrons can buy tickets for a
single play; alternatively, they can purchase a season pass for either three plays or six
plays. Three-play passes offer a 10% discount from the prices of single tickets; six-play
passes, a 25% discount. Since most patrons live within 30 miles of the theatre, all ticket
sales are done at the box office only. The theatre has an “open seating” plan, so patrons
do not reserve a specific seat at any performance. Single-play purchases must be paid
for in cash; season passes can be paid for with cash or major credit card. The Festival
Theatre deposits all its cash receipts in the bank daily.
Generate field names for the patron table, sales table and the sales/play table.
List the steps in the accounting cycle in their proper order.
List the four macro- and four micro-level factors managers should consider when they
select information technology resources based on the discussion in the text.
Taylor became aware of a serious ethical breach in her company related to a small
group of managers recording sales revenue inappropriately. In interviewing those
managers about the issue, Taylor asked each one why they had committed the ethical
breach.
Use two of the four schools of ethical thought discussed in the text to create brief
responses the managers would have given Taylor. For each response, indicate the
relevant school of ethical thought.
As part of your company’s effort to design an enterprise risk management plan using the
COSO framework, you have been asked to develop an information technology tool that
will monitor the plan. Use the steps in the systems development life cycle to explain
how you would proceed; ensure that your discussion includes ideas specific to
monitoring the ERM plan.
Homemade Crafts Company (HCC) sells collectible items such as dolls, jewelry, drink
coasters and table linens. The company, which has five full-time employees, obtains its
merchandise from independent contractors throughout the United States; they then
mark up the products and sell them at craft stores and other outlets. Two of the five
employees interact with the independent contractors, arranging inventory purchases
based on demand for HCC’s products and their own personal preferences. Those same
employees use their personal vehicles to transport the inventory from HCC’s main
office to the retail locations where they will be sold. A third employee serves as the
company’s receptionist, while the fourth manages all aspects of the accounting
information system. The company president is the fifth employee, and is in charge of
administrative affairs such as hiring, performance evaluation and publicity. HCC
purchases its entire inventory on account from the independent contractors, some of
whom offer cash discount terms for early payment. The company accountant records
purchases in Quickbooks using invoices submitted by the two employees in charge of
purchasing. Quickbooks is set up to remind the accountant to pay invoices three days
before their due date. At that time, the accountant prepares a check and uses a rubber
stamp of the president’s signature to sign the check before mailing it to the appropriate
vendor. The receptionist, who also deposits cash receipts in the bank, reconciles the
bank statement once a month. Identify three risk exposures for HCC’s
acquisition/payment process. For each risk exposure, indicate how it would be
classified in Brown’s risk taxonomy. Also suggest, for each risk exposure, two internal
controls. Do not use the same internal control more than once.
Indicate the document described in each of the following items.
1) Accumulates labor data in the conversion process
2) Computes payroll data for all employees for a given pay period
3) Establishes payroll withholding status
4) Reports amounts paid to an independent contractor
5) Reports amounts withheld by employer to IRS
6) Reports employer’s federal unemployment taxes
7) Reports year-end information for tax purposes
8) Requests raw material from the warehouse for production
9) Summarizes cost and quantity information in a process costing system
10) Summarizes costs in a job costing system
The text outlined seven steps companies should complete for an initial public offering.
Complete the risk/control matrix below based on the indicated risks associated with an
IPO.
