NAME: ______________________________ SCORE: _________

GENERAL INSTRUCTION:

READ CAREFULLY ALL THE QUESTIONS BEFORE ANSWERING. Strictly NO ERASURES ALLOWED. 10 pts deduction
for using FRICTION or PENCIL. FOLLOW THE INSTRUCTIONS.

MULTIPLE CHOICE: WRITE YOUR ANSWER BESIDES EACH NUMBERc.

1. Audit automation least likely include:

a. Expert systems.

b. Tools to evaluate a client’s risk management procedures.

c. Manual working papers.

d. Corporate and financial modeling programs for use as predictive audit tests.

2. Whether or not a real time program contains adequate controls is most effectively determined by the use of:

a. Audit software.

b. A tracing routine.

c. An integrated test facility.

d. A traditional test deck.

3. When an auditor tests a computerized accounting system, which of the following is true of the test data
approach?

a. Test data must consist of all possible valid and invalid conditions.

b. The program tested is different from the program used throughout the year by the client.

c. Several transactions of each type must be tested.

d. Test data are processed by the client’s computer programs under the auditor’s control.

4. The use of generalized audit software package:

a. Relieves an auditor of the typical tasks of investigating exceptions, verifying sources of information, and
evaluating reports.

b. Is a major aid in retrieving information from computerized files.

c. Overcomes the need for an auditor to learn much about computers.

d. Is a form of auditing around the computer.

5. An auditor most likely would introduce test data into a computerized payroll system to test internal controls
related to the

a. Existence of unclaimed payroll checks held by supervisors.

b. Early cashing of payroll checks by employees.

c. Discovery of invalid employee I.D. numbers.

d. Proper approval of overtime by supervisors.

6. Which of the following statements is not true to the test data approach when testing a computerized
accounting system?

a. The test data must consist of all possible valid and invalid conditions.

b. The test need consist of only those valid and invalid conditions which interest the auditor.
c. Only one transaction of each type need be tested.

d. Test data are processed by the client’s computer programs under the auditor’s control.

7. Which of the following computer-assisted auditing techniques allows fictitious and real transactions to be
processed together without client operating personnel being aware of the testing process?

a. Integrated test facility.

b. Input controls matrix.

c. Parallel simulation.

d. Data entry monitor.

8. Which of the following methods of testing application controls utilizes a generalized audit software package
prepared by the auditors?

a. Parallel simulation.

b. Integrated testing facility approach.

c. Test data approach.

d. Exception report tests.

9. Test data, integrated test data and parallel simulation each require an auditor to prepare data and computer
programs. CPAs who lack either the technical expertise or time to prepare programs should request from the
manufacturers or EDP consultants for:

a. The program code.

b. Flowchart checks.

c. Generalized audit software.

d. Application controls.

10. An auditor who is testing EDP controls in a payroll system would most likely use test data that contain
conditions such as:

a. Deductions not authorized by employees.

b. Overtime not approved by supervisors.

c. Time tickets with invalid job numbers.

d. Payroll checks with unauthorized signatures.

11. Auditing by testing the input and output of an EDP 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.

12. Which of the following tasks could not be performed when using a generalized audit software package?

a. Selecting inventory items for observations.

b. Physical count of inventories.

c. Comparison of inventory test counts with perpetual records.

d. Summarizing inventory turnover statistics for obsolescence analysis.

13. All of the following are “auditing through the computer” techniques, except:

a. Reviewing source code.

b. Test-decking.

c. Automated tracking and mapping.

d. Integrated test facility.

14. The output of a parallel simulation should always be:

a. Printed on a report.

b. Compared with actual results manually.

c. Compared with actual results using a comparison program.

d. Reconciled to actual processing output.

15. Generalized audit software is a computer-assisted audit technique. It is one of the widely used techniques
for auditing computer application systems. Generalized audit software is most often used to: a. Verify computer
processing.

b. Process data fields under the control of the operation manager.

c. Independently analyze data files.

d. Both A and B.

16. Which of the following testing techniques is more commonly used by internal auditors than by independent
auditors?

a. Integrated test facilities.

b. Test data

c. Controlled programs.

d. Tagging and tracing transactions.

17. Which of the following is a disadvantage of the integrated test facility approach?

a. In establishing fictitious entities, the auditor may be compromising audit independence.

b. Removing the fictitious transactions from the system is somewhat difficult and, if not done carefully, may
contaminate the client's files.

c. ITF is simply an automated version of auditing "around" the computer.

d. The auditor may not always have a current copy of the authorized version of the client's program.

18. When conducting field work for a physical inventory, an auditor cannot perform which of the following steps
using a generalized audit software package?

a. Observing inventory.

b. Selecting sample items of inventory.

c. Analyzing data resulting from inventory.

d. Recalculating balances in inventory reports.

19. Which of the following testing techniques minimizes the possibility that the auditors will contaminate a
client's financial records?

a. Test data.

b. Integrated test facilities.

c. Controlled programs.

d. Tagging and tracing transactions.

20. Auditing through the computer is most likely to be used when:

a. Input transactions are batched and system logic is straightforward.

b. Processing primarily consists of sorting the input data and updating the master file sequentially.

c. Processing is primarily on line and updating is real-time.

d. Outputs are in hard copy form.

II. IDENTIFICATION

1. ________________________– a set of dummy transactions specifically designed to test the control

activities that management claims to have incorporated into the processing programs.
2. ________________________– develops test data that purports to test every possible condition that an
auditor expects a client’s software will confront.
3. ________________________- a variation of test data whereby simulated data and actual data are run
simultaneously with the client’s program and computer results are compared with auditor’s
predetermined results.
4. _________________________ – it involves processing of client’s live (actual) data utilizing an auditor’s
generalized audit software.
5. __________________________ – a variation of parallel simulation which involves processing of actual
client data through a copy of the client’s application program.
6. __________________________ – test the audit computer controls throughout the period.
7. __________________________ – programmed audit routines incorporated into application programs
that are designed to perform an audit function such as a calculation or logging activity.
8. __________________________ – logs that collect transaction information for subsequent review and
analysis by the auditor.
9. __________________________ – “exits” in an entity’s computer program that allows an auditor to insert
commands for audit processing.
10. __________________________– a transaction record is “tagged” and then traced through critical points
in the information system.
11. __________________________ – this technique attaches additional audit data which would not
otherwise be saved to regular historic records and thereby helps to provide a more complete audit trail.

12. ___________________________– these logs that track particular functions, include reports of the
resources used by the computer system. The auditor may be able to use them to review the work
processed, to determine whether unauthorized applications were processed and to determine that
authorized applications were processed properly.

13. ____________________________ – this logs changes in programs, program modules, job control
language and other processing activities.

14. _____________________________ – this restricts access to computers to authorized personnel through

techniques such as only allowing certain users with “read-only” access or through use of encryption
15. ______________________________ – computer programs used to process data of audit significance from
the client’s accounting system.

16. ______________________________ – DO NOT WRITE ANYTHING ON THE TEST PAPER EXCEPT YOUR
NAME AND AFTER READING THIS, PASS YOUR PAPER. AUTMOTAIC 75% GRADE IN YOUR EXAM IF YOU DID
NOT FOLLOW THE INSTRUCTION. 95% IF YES.

17. ______________________________-written programs (also known as special-purpose or custom-

designed programs) – computer programs designed for specific audit tasks.

18. _______________________________ – part of the systems software that performs routine CIS tasks.
They are generally not designed for audit purposes.
 19. _______________________________ – contain a variety of pre-defined mathematical operations and
functions that can be applied to data entered into the cells of a spreadsheet.

20. _______________________________ – designed to generate a trial balance, lead schedules and other
reports useful for the audit.

III. CROSSWORDS: FIND AND ENCIRCLE THE WORDS. 15 pts