Which level of the capability maturity model best describes each of the following
business processes?
a. After consulting the company procedures manual and her supervisor for guidance,
Lindsay developed a more detailed description of the invoice payment process.
b. After developing a rigorous description of the purchase order process, Joe set a goal
of processing each one in no more than one day.
c. After figuring out the best way to process purchase orders, Joe developed a schedule
indicating what tasks he should complete each day. He did not share the schedule or the
process with anyone else.
d. Although CPK Corporation had a process for paying vendor invoices, Lindsay
thought it didn’t work well. So, she used her own system without telling her supervisor
or co-workers.
e. Employees of the purchasing department all attended a seminar on how to make the
purchasing department more efficient and effective.
As specified by the Audit Clarity Project, when an audit wants to call attention to
something in the financial statements, the report must include:
A. an emphasis-of-matter paragraph.
B. an audit assertions paragraph.
C. the relevant GAAS.
D. references to appropriate professional codes of ethics.
Match each description on the left with the appropriate type of audit on the right.
1>Determines whether the various forms of IT in an AIS are producing expected results
A.Operational audit
2>A basket of the other types of audits
B.Investigative audit
3>Examination of a company’s rules and procedures for conducting business
C.Systems audit
4>Associated with the broader field of forensic accounting
D.Compliance audit
5>Determines the degree to which assumptions underlying decisions are valid
E.International audit
6>Governmental and not-for-profit organizations are subject to this kind of audit
F.Management audit
7> Examination of a company’s AIS and financial statements G.Financial audit
Internal controls can prevent, detect or correct a problem. Which of the following
groups includes controls that will fulfill all three with respect to the risk of an employee
stealing tools from a company warehouse?
A. Random searches, video surveillance, insurance
B. Random searches, physical security, video surveillance
C. Lockbox systems, video surveillance, limit checks
D. Lockbox systems, limit checks, insurance
The chapter discussed four macro-level and four micro-level factors that should be
considered when evaluating information technology for use in the accounting
information system. It also discussed Sylla and Wen’s three-stage process for evaluating
information technology investments. Which of the following best pairs a macro-level
factor with a level from the Sylla and Wen framework?
A. Strategic fit, intangible benefits evaluation
B. Need, IT investment risk analysis
C. Vendor reliability, tangible benefits evaluation
D. None of these.
Liam has developed a good process for safeguarding his company’s information
technology assets. He has completed the following actions with respect to the process:
(i) talked about his methodology with some of his co-workers, (ii) created a schedule
for applying his process to various kinds of information technology assets, (iii)
explained how his process relates to similar processes in his company. Based on the
capability maturity model, the process would best be described as:
A. Repeatable
B. Defined
C. Managed
D. Optimized
Consider the following as you answer the question: Jon is an information systems
consultant with a diverse client base. Some of his clients recently posed the questions
listed below; Jon is considering which type of flowchart would best be used to answer
each question.
i. What happens to a federal tax return once it is received by the IRS?
ii. How should a company calculate payroll withholding taxes?
iii. What kind of computer network is in place at a local IRS office?
iv. What process does an organization employ to determine how to invest money in a
pension fund?
v. What steps must be completed to write and publish an accounting textbook?
The chapter discussed four types of flowcharts. Which of the preceding questions
would be answered by two different types?
A. I and III
B. II and IV
C. II and V
D. IV and V
Linda embezzled cash from her employer by forging a signature on a check. Which of
the following internal controls for source documents would most likely prevent such
occurrences in the future?
A. Sequential numbering
B. Physical security
C. Transaction limits
D. Bank reconciliation
Both e-business and ASPs create risks and costs for organizations. Which of the
following best pairs a potential cost of e-business with a potential risk of using an ASP?
A. Potential for customer distrust, inability to pay monthly fees
B. Financial costs associated with setting up networks, reduced flexibility
C. Potential for customer distrust, psychological & behavioral factors
D. Financial costs associated with setting up networks, psychological & behavioral
factors
Consider the following statements as you answer the question:
i. Felix, a cash receipts clerk, applied Allison’s payment to the invoices indicated on her
remittance advice.
ii. In purchasing books, Allison filled out a form on a bookstore’s web site.
iii. The bookstore’s web site verified Allison’s credit limit.
iv. William, a warehouse worker, prepared Allison’s books for shipment.
All of the following steps in the sales/collection process are represented in the four
statements except:
A. The first step.
B. The second step.
C. The sixth step.
D. The last step.
Purposes of internal control include:
A. Safeguarding assets.
B. Ensuring financial statement reliability.
C. Promoting operational efficiency.
D. All of these.
Anna and Melinda were choosing a new general ledger system for the company they
own. They decided to use three factors for the evaluation: adaptability, strategic fit and
training. They considered training three times more important than strategic fit; they
considered adaptability twice as important as strategic fit. To keep their evaluation
simple, they assigned a weight of “1” to strategic fit. If software package B had scores
of 3 on adaptability, 6 on strategic fit and 8 on training, its score using the
weighted-rating technique will be:
A. 6.
B. 12.
C. 36.
D. Some other number.
The COSO internal control framework includes “monitoring” as one component.
Monitoring is most similar to which step in Steps for Better Thinking?
A. Identifying
B. Exploring
C. Prioritizing
D. Envisioning
Umble and Umble suggested six necessary conditions for a successful ERP
implementation. Which of the conditions is most clearly related to the “internal
environment” component of the COSO frameworks on internal control and enterprise
risk management?
A. Obtain organizational commitment.
B. Ensure data accuracy.
C. Select a compatible ERP system.
D. All of these.
Ethics is a set of standards that:
A. Is established by a particular group.
B. Is imposed on members of the group to regulate behavior.
C. Both established by a particular group and imposed on members of the group to
regulate behavior.
D. Neither established by a particular group nor imposed on members of the group to
regulate behavior.
Which of the following sets includes amounts from a single financial statement?
A. Cash, sales, interest earned
B. Cash, accounts receivable, interest earned
C. Cash, accounts receivable, accounts payable
D. Sales, accounts receivable, interest earned
Internal controls associated with the acquisition/payment process include:
A. Separation of duties.
B. Adequate documentation.
C. Both separation of duties and adequate documentation.
D. Neither separation of duties nor adequate documentation.
Laurie and Milton were developing a business process management plan for their
organization. After deciding to focus on the process of purchasing fixed assets, they
should:
A. Determine how the fixed asset purchasing process currently works.
B. Estimate the remaining useful life for each fixed asset in the company.
C. Look up the definition of “fixed assets” on the FASB web site.
D. Make the improvements they believe are necessary.
Brown’s taxonomy of risk includes ‘systems risk” as a form of operational risk. An
organization creating a knowledge management system has the greatest exposure to
systems risk in which of the seven steps for creating the knowledge management
system?
A. The fourth step
B. The fifth step
C. The sixth step
D. All seven steps
Divide the following examples of information overload causes into five groups based
on the categories suggested by Eppler and Mengis. Specify the name of each group.
1) Anxiety about job performance
2) Attempting a task for the first time
3) Disagreements about who should be a group leader
4) E-mail forwarded to a smart phone
5) Health conditions
6) Highly technical information
7) Information conveyed via symbols
8) Internet searches with very broad terms
9) Significant time pressure
10) Working with too large a group
Both systems flowcharts and data flow diagrams can be used to document accounting
information systems. Explain two similarities of and two differences between the
methods.
Which element of expectancy theory is illustrated by each of the following statements?
1> After changing his major from finance to accounting, Andy planned a schedule that
would allow him to finish his degree in four years.
2> Anh’s suggestions for business process improvements often result in changes at her
company.
3> Erin wasn’t entirely sure that she wanted the extra responsibilities associated with a
promotion.
4> Gloria’s boss promised her a reward if she completed a training course on business
process management.
5> Shortly after his hiring, Zachary knew he eventually wanted to be named “employee
of the month.”
Explain the structure of XBRL, including its relationship to XML.
XBRL creates certain benefits for both accountants and organizations. Consider the
statements below; rewrite each one to reflect a benefit of XBRL.
1) A company with divisions in more than one country will have to cope with
differences in hardware, software, language, currency and terminology in preparing its
consolidated financial statements.
2) Decision making in accounting information systems that do not use XBRL may be
slow and inefficient because information is not as readily available.
3) SEC and IRS filings can be very time consuming without XBRL.
4) The bookkeeping process in view-driven accounting information systems is costly
and prone to error because it constantly rearranges previously collected data into new
forms.
5) Without the benefit of XBRL, accountants spend a lot of time gathering data and
formatting it based on the decisions to be made with it.
Explain, in no more than ten sentences, the process depicted in the following flowchart:
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. Create specifications (table names
and field names) for three tables the theatre would need to track ticket sales; if a
junction table is indicated, you must include its specifications as one of the three.