Internal Control and Computer Based Information Systems

D ensure that hardware controls are operating

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backup data files. d. Ensure that hardware controls are operating effectively and as  designed by the computer manufacturer. ANSWER: A 40. When testing a computerized accounting system, which of the following is not true of  the test data approach? a. The test data need consist of only those valid and invalid conditions in which the  auditor is interested. b. Only one transaction of each type need be tested. c. Test data  are processed by the client's computer programs under the auditor's control. d. The test  data must consist of all possible valid and invalid conditions. ANSWER: D 41. In studying a client's internal controls, an auditor must be able to distinguish between  prevention controls and detection controls. Of the following data processing controls,  which is the best detection control? a. Use of data encryption techniques. b. Review of machine utilization logs. c. Policy  requiring password security. d. Backup and recovery procedure. ANSWER: B 42. Which of the following procedures is an example of auditing "around" the computer? a. The auditor traces adding machine tapes of sales order batch totals to a computer printout of the sales journal. b. The auditor develops a set of hypothetical sales transactions and, using the client's computer program, enters the transactions into the system and observes the processing flow. c. The auditor enters hypothetical transactions into the
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client's processing system during client processing of live" data. d. The auditor observes client personnel as they process the biweekly payroll. The  auditor is primarily concerned with computer rejection of data that fails to meet  reasonableness limits. ANSWER: A 43. Auditing by testing the input and output of a computer-based system instead of the  computer program itself will a. Not detect program errors which do not show up in the output sampled. b. Detect all  program errors, regardless of the nature of the output. c. Provide the auditor with the  same type of evidence. d. Not provide the auditor with confidence in the results of the  auditing procedures. ANSWER: A 44. Which of the following is an acknowledged risk of using test data when auditing  CBIS records? a. The test data may not include all possible types of transactions. b. The computer may  not process a simulated transaction in the same way it would an identical actual  transaction. c. The method cannot be used with simulated master records.
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