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According to COSO, internal control is a:
A. Process.
B. Set of rules.
C. Responsibility of employees only.
D. Requirement only for publicly-traded firms.
TCP Corporation issues a purchase order whenever it buys inventory. Internal controls
associated with the purchase order may include:
A. Sequential numbering
B. Transaction limits
C. Both sequential numbering and transaction limits
D. Neither sequential numbering nor transaction limits
Information technology skills can link auditing to accounting information systems.
Which of the following tasks can be completed using only information technology?
A. All five generic steps of a financial statement audit.
B. All ten steps in the accounting cycle.
C. Both all five generic steps of a financial statement audit and all ten steps in the
accounting cycle.
D. Neither all five generic steps of a financial statement audit nor all ten steps in the
accounting cycle.
Tim is the lead auditor on an engagement with WRT Corporation. Before starting the
audit, Tim planned and reviewed the schedule with his audit team. Which of the
following generally accepted audit standards did Tim uphold by planning?
A. Independence
B. Professional care
C. Supervision
D. Disclosure
Internal control risks associated with XBRL include:
A. Compromised data.
B. Tagging errors.
C. Both compromised data and tagging errors.
D. Neither compromised data nor tagging errors.
Refer to the previously presented set of flowcharting symbols labeled Symbol A
through Symbol J. Which symbol would be used in a systems flowchart to represent
each of the following items?
1) A bank statement
2) Completing the steps in the accounting cycle
3) Creating an enterprise risk management plan
4) Determining if a customer should be granted credit
5) Electronic records of sales transactions
6) Moving a document from the first column of a page to the third column of the same
page
7) Reconciling a bank statement in a flowchart to be read by experienced accountants
8) Sending a sales invoice outside the system boundary
9) Storing copies of purchase orders in a box
10) The statement of cash flows
Accounting information systems have five generic elements. A data flow diagram
would be least helpful for which of the five?
A. Processes
B. Outputs
C. Storage
D. Internal control
OTA Corporation completed the following events as part of its acquisition/payment
process. For each event, indicate the document(s) OTA would use. (Some events may
require more than one document; other transactions may require no documents.)
a. Received request to order 300 units of inventory with an expected cost of $1,400.
b. Purchased inventory on account, $1,500.
a. purchase requisition
b. purchase order
c. bill of lading, check
d. purchase order, receiving report
e. debit memo
f. purchase order, receiving report, check
ABT Corporation uses block coding for its chart of accounts, which includes Cash
(101), Land (201), Accounts payable (301) and Retained Earnings (501). Which of the
following account numbers is most likely associated with an account that will appear on
the adjusted trial balance but not on the post-closing trial balance?
A. 203
B. 405
C. 504
D. 701
Brett and Erin are accountants working for XMP Corporation; Brett is very interested in
working his way up to being XMP's chief financial officer. He believes if he completes
all his assigned tasks well before their established deadlines and controls costs in his
area, he will be promoted. He is confident he can achieve those two goals. Which of the
following best pairs an element of expectancy theory with a phrase that illustrates it?
A. Expectancy: completes all his assigned tasks well before their established deadlines.
B. Instrumentality: very interested in working his way up to being XMP's chief
financial officer.
C. Valence: very interested in working his way up to being XMP's chief financial
officer.
D. Instrumentality: completes all his assigned tasks well before their established
deadlines.
BSP Corporation purchased inventory from RSR Corporation on account, $1,000. BSP
also paid $100 freight to reimburse RSR for its payment to the common carrier that
transported the merchandise. If RSR offered credit terms of 2/10, n/30 and BSP paid
within the discount period, the total cash disbursed to RSR was:
A. $1,080.
B. $1,078.
C. $980.
D. Some other amount.
Robert is the president and CEO of Computer Solutions; the firm's main activity is
installing enterprise resource planning software. When a client calls Robert, he does an
"intake interview" where he assesses the client's needs and learns about their company.
Robert tries to interview at least a dozen people at each client, including top
management and mid- and lower-level employees.
In the preceding case, who would complete the first step in the systems development
life cycle?
A. Robert
B. The client
C. Both Robert and the client
D. The SEC
Consider the following case as you respond to the questions:
HSO Corp. designs, manufactures and sells golf carts, scooters and similar vehicles.
When a prospective client contacts one of their seven corporate offices, the office
manager fills out an "intake questionnaire" to determine if HSO can meet the
prospective client's needs. The office manager assembles a team of employees with
expertise in design, production, marketing and accounting; the team reviews the intake
questionnaire and determines if HSO can take on the order. If so, the office manager
prepares a three-page written proposal for the prospective client; the proposal explains
the responsibilities of both HSO and the client, along with a timeline and a budget. The
proposal is forwarded to the prospective client electronically, and the client has ten
calendar days to accept it. If HSO cannot take on the order, the prospective client
receives an automatically generated form letter; if the prospective client does not accept
the proposal within ten calendar days, they receive a different form letter. The new
client remits half of the fee at the time the proposal is accepted, and HSO prepares
weekly progress reports as the project moves forward. The reports are filed in HSO's
database; a hard copy is sent to the client. On a monthly basis, HSO's office manager
prepares a comprehensive status report for all current engagements. One week before
each project is concluded, HSO bills the client for half of the remaining amount due;
after the client has paid all outstanding invoices, HSO completes the work and bills the
client for all remaining amounts. HSO delivers the finished product; the client must pay
the full amount due within 30 days of the final invoice date. If the client pays within 15
days, HSO gives a 3% discount off the amount due.
On April 1 of the current year, EPL Corporation accepted a three-page written proposal
from HSO to design and build 10 customized golf carts for EPL's internal use. The total
price for the order was $3400. For the transaction described, EPL's relational database
will include a(n) ___ table with ___ as its primary key.
A. inventory; purchase order number
B. equipment; purchase order number
C. equipment; item identification number
D. inventory; item identification number
Which of the following would best be depicted with a systems flowchart: (i) steps in the
accounting cycle, (ii) development of an internal control plan?
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Jose is an artist specializing in family portraits. Although his business started as a
traditional "brick and mortar" enterprise, he is now interested in expanding into
e-business. He has hired you as a consultant; explain four changes Jose is likely to see if
he expands into the e-business arena.
Consider the following case as you respond to the questions:
HSO Corp. designs, manufactures and sells golf carts, scooters and similar vehicles.
When a prospective client contacts one of their seven corporate offices, the office
manager fills out an "intake questionnaire" to determine if HSO can meet the
prospective client's needs. The office manager assembles a team of employees with
expertise in design, production, marketing and accounting; the team reviews the intake
questionnaire and determines if HSO can take on the order. If so, the office manager
prepares a three-page written proposal for the prospective client; the proposal explains
the responsibilities of both HSO and the client, along with a timeline and a budget. The
proposal is forwarded to the prospective client electronically, and the client has ten
calendar days to accept it. If HSO cannot take on the order, the prospective client
receives an automatically generated form letter; if the prospective client does not accept
the proposal within ten calendar days, they receive a different form letter. The new
client remits half of the fee at the time the proposal is accepted, and HSO prepares
weekly progress reports as the project moves forward. The reports are filed in HSO's
database; a hard copy is sent to the client. On a monthly basis, HSO's office manager
prepares a comprehensive status report for all current engagements. One week before
each project is concluded, HSO bills the client for half of the remaining amount due;
after the client has paid all outstanding invoices, HSO completes the work and bills the
client for all remaining amounts. HSO delivers the finished product; the client must pay
the full amount due within 30 days of the final invoice date. If the client pays within 15
days, HSO gives a 3% discount off the amount due.
On April 1 of the current year, EPL Corporation accepted a three-page written proposal
from HSO to design and build 10 customized golf carts for EPL's internal use. The total
price for the order was $3400. A REA model of EPL's process will include which of the
following in the center column: (i) choose a supplier, (ii) purchase equipment, (iii) pay
invoice?
A. I and II only
B. II and III only
C. I and III only
D. I, II and III
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. An employee receives threats from a co-worker via e-mail.
iv. An unhappy customer launches a denial-of-service attack.
Carter's taxonomy of computer crime comprises four categories. Which of the
following statements is most true?
A. The list includes examples of all four categories.
B. The list includes examples of all categories except associated.
C. The list includes examples of all categories except target.
D. The list includes examples of all categories except incidental.
Carlos is the vice president of finance at PLP Corporation. When he joined the company
five years ago, the finance division was organized in two departments: operating
transactions and non-operating transactions. Each department had two employees and a
manager. The operating transactions department handled all aspects of transactions
dealing with inventory, supplies, payroll and other operating expenses; the
non-operating transactions department handled all aspects of transactions dealing with
short-term investments, long-term debt and shareholders. Any transactions that did not
fit one of the two groups were handled by the vice president of finance. The finance
division had its own procedures manual, organized into three chapters: operating
transactions, non-operating transactions, other transactions. Within the operating
transactions department, one employee handled payroll only, while the other employee
handled all aspects of non-payroll transactions. Within the non-operating transactions
department, one employee handled transactions related to short-term investments. The
other employee handled long-term debt transactions, while the department manager
handled all aspects of transactions dealing with shareholders. Based on the narrative,
identify five risk exposures for the finance division at PLP Corporation. For each risk
exposure, use Brown's taxonomy to identify both the broad category and the specific
type of risk within the category.
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. The ACFE maintains registrant
records independently of each seminar since a registrant may be involved in multiple
seminars over time. 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
in one or more installments; 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 a
REA model for the registration and collection process.
In your own words, explain the ten generally accepted auditing standards discussed in
the text.
Please refer to the following flowchart as you respond to the next problem:
According to ANSI, flowchart symbols can be divided into four main groups. Analyze
the symbols in the flowchart above; sort them into the four groups.
McDonald suggested four characteristics necessary to be considered a professional.
Revise each statement below to more appropriately reflect one of those characteristics;
indicate the relevant characteristic in the space provided.
List and discuss three basic principles of business process management.
Pearl had been asked by her boss to develop a new way to process expense
reimbursements in her company. In your own words, list and discuss the steps Pearl
should take to accomplish her task.
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.
Create a Level Zero data flow diagram for the process described in the case.
Match each detailed element of Brown's risk taxonomy on the left with the most
appropriate category on the right.
