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- CHAPTER 5 – Problems 138. List the six steps for establishing internal controls and describe how this process leads to stronger overall corporate governance. 139. List the items that must be certified by corporate management in accordance with the provisions of the Sarbanes-Oxley Act.  Discuss how these responsibilities have likely changed the.
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- CHAPTER 6 - MULTIPLE CHOICE 51.The process of determining the strategic vision for the organization, developing the long-term objectives, creating the strategies that will achieve the vision and objections, and implementing those strategies is referred to as A.IT Governance B.Strategic Governance C.Strategic Management D.IT Management 52.A structure of relationships and processes to direct and control.
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- CHAPTER 5 - TRUE / FALSE 1.Research indicates that companies who stress corporate governance tend to be rewarded with higher rates of return and a lower cost of capital. 2.The high cost related to corporate governance far outweighs any of the related benefits. 3.The purpose of corporate governance is to encourage the.
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- CHAPTER 6 – END OF CHAPTER QUESTIONS: 119.IT governance includes all but which of the following responsibilities? A.Aligning IT strategy with the business strategy B.Writing programming code for IT systems C.Insisting that an IT control framework be adopted and implemented D.Measuring IT’s performance 120.Which phase of the system development life cycle includes determining user needs.
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117.Internal controls over the input, processing, and output of accounting applications are called: A.Accounting Controls B.Application Controls C.Network Controls D.LAN Controls 118.This type of control is intended to ensure the accuracy and completeness of data input procedures and the resulting data: A.Input Controls B.Internal Controls C.Processing Controls D.Output Controls 119.This type of control is intended to ensure the accuracy and.
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66.A special obligation of trust, especially with respect to the finances of another, is called: A.Financial Stewardship B.Fiscal Transparency C.Fiduciary Duty D.Internal Controls 67.Within the corporate environment, this term means that management has been entrusted with the power to manage the assets of the corporation, which are owned by the shareholders. A.Fiscal Transparency B.Fiduciary C.Stewardship D.Accuracy 68.The manner in which.
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- CHAPTER 4 – SHORT ESSAY 175. Categorize each of the following as either a general control or an application control:  a. validity check b. encryption c. security token d. batch total e. output distribution f. vulnerability assessment g. firewall h. antivirus software 176. Each of the given situations is independent of the other. For each, list the programmed.
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- CHAPTER 5 - MULTIPLE CHOICE 36.Which of the following groups would use factors such as those that affect the supply and demand of corporate leaders and tend to emphasize the importance of motivating leaders through the use of incentive programs as part of their definition of corporate governance? A.Financiers B.Economists C.Accountants D.Lawyers 37.This group of.
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86.This section of the Sarbanes-Oxley Act requires management assessment and reporting of the company’s internal controls. A.Section 404 B.Section 409 C.Section 301 D.Section 201 87.This section of the Sarbanes-Oxley Act requires that auditors include, as part of their audit procedures, an attestation to the internal control report prepared by management. A.Section 404 B.Section 409 C.Section 301 D.Section 201 88.This section.
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71.The process of designing the outputs, inputs, user interfaces, databases, manual procedures, security and controls, and documentation of the new system is referred to as: A.Conceptual Design B.Software Selection C.Systems Design D.Detailed Design 72.When attempting to prioritize IT projects, the IT governance committee needs to consider: A.The assessment of IT systems and their match to strategic.
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156. Why should an organization be concerned about repudiation of sales transactions by the customer?  157. A firewall should inspect incoming and outgoing data to limit the passage of unauthorized data flow.  Is it possible for a firewall to restrict too much data flow?  158. How does encryption assist in limiting unauthorized.
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121. Identify the six financial matters that must be certified by a company’s top officers under the requirements of Section 302 of the Sarbanes-Oxley Act. 122. Explain the relationship between Section 401 of the Sarbanes-Oxley Act and the concept of transparency.  123. Explain the difference between management’s responsibility and the company’s external auditors’.
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61.The study of the current system to determine the strengths and weaknesses and the user needs of that system is called: A.Systems Analysis B.Systems Design C.Systems Planning D.Systems Implementation 62.This phase of SDLC requires the collection of data about the system and the careful scrutiny of those data to determine areas of the system that.
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185. Control totals include batch totals, hash totals, and record counts. Which of these totals would be useful in preventing or detecting IT system input and processing errors or fraud described as follows? a.A payroll clerk accidentally entered the same time card twice. b.The accounts payable department overlooked an invoice and did not enter.
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179. Application controls include input, processing, and output controls. One type of input control is source document controls.  Briefly explain the importance of each of the following source document controls: Form design, Form authorization and control, and Retention of source documents. 180. Explain how control totals such as record counts, batch totals, and hash.
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- CHAPTER 4 – SHORT ANSWER QUESTIONS 151. What is the difference between general controls and application controls?  152. Is it necessary to have both general controls and application controls to have a strong system of internal controls?  153. What kinds of risks or problems can occur if an organization does not.
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107.The accuracy, completeness, and timeliness of the process in IT systems are referred to as: A.Availability Risks B.Security Risks C.Confidentiality Risks D.Processing Integrity Risks 108.The software that controls the basic input and output activities of the computer are called: A.Operating System B.Application Software C.Data Base Management System D.Electronic Data Interchange 109.Unauthorized access to the operating system would allow the unauthorized.
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91.The many sets of activities within the organization performed to accomplish the functions necessary to continue the daily operations are referred to as: A.Business Systems B.Business Processes C.Business Activities D.Business Functions 92.The systems analysis report, which is sent to the IT governance committee, will inform the committee of all of the following, except: A.The results of.
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111. How can internal auditors maintain independence, since they are employees of the company? 112. Identify the four functions of the corporate governance process.  113. Describe the key connection between tone at the top and management oversight.  114. Explain the connection between fiduciary duty and financial stewardship.  115. Why is it.
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81.The purpose of this step in the systems analysis phase is to determine whether the problem or deficiency in the current system really exists and to make a “go” or a “no-go” decision. A.Survey of the Current System B.Determination of User Information Needs C.Business Process Reengineering D.Preliminary Investigation 82.A detailed study of the current system.
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31.In general, purchased software is more costly but more reliable than software designed in-house. 32.While it is not necessary to hire a consulting firm, many organizations find that the special expertise of consulting firms is most beneficial in the design and implementation of accounting system software. 33.When in the systems design phase.
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87.This type of software should be used to avoid destruction of data programs and to maintain operation of the IT system.  It continually scans the system for viruses and worms and either deletes or quarantines them. A.Penicillin Software B.Antivirus Software C.Infection Software D.Internet Software 88.The process of proactively examining the IT system for weaknesses that.
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97.General controls for an IT system include: A.Controls over the physical environment only. B.Controls over the physical access only. C.Controls over the physical environment and over the physical access. D.None of the above. 98.A battery to maintain power in the event of a power outage meant to keep the computer running for several minutes after.
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- CHAPTER 5 – SHORT ESSAY 131. Why are shareholders sometimes considered internal stakeholders and sometimes considered external stakeholders? 132. Is it possible for financial information to be accurate but not transparent?  Similarly, is it possible for financial information to be transparent but not accurate?  Explain. 133. Earnings management involves lying about the.
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141.  Using an Internet search engine (such as Google, Dogpile, Lycos), determine who was the whistleblower at Enron.  Summarize the circumstances. What was the relationship of this person with the company?  Was this an internal or external stakeholder? 142. Using an Internet search engine (such as Google, Dogpile, Lycos), search for.
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- CHAPTER 5 – SHORT ANSWER QUESTIONS 106. Why is tone at the top so important to corporate governance?  107. Why do you think companies that practice good corporate governance tend to be successful in business?  108. Which stakeholder group (internal or external) is more likely to be affected by corporate governance, and.
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- CHAPTER 4 – END OF CHAPTER QUESTIONS: 138.Internal controls that apply overall to the IT system are called: A.Overall Controls B.Technology Controls C.Application Controls D.General Controls 139.In entering client contact information in the computerized database of a telemarketing business, a clerk erroneously entered nonexistent area codes for a block of new clients.  This error rendered.
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189. Visit the AICPA website at www.aicpa.org. Search for the terms “WebTrust” and “SysTrust.” Describe these services and the role of Trust Services Principles in these services. 190. Using a search site, look up the terms “disaster recovery,” along with “9/11.” The easiest way to search for both items together is.
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135. Although the Sarbanes-Oxley Act of 2002 applies to public companies, many private business organizations have been impacted by this legislation, especially if they are suppliers to a public company.  Explain how this external stakeholder relationship can lead to the widespread application of Section 404 of the Act. 136. Describe at least three.
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56.This governing group is the federal regulatory agency responsible for protecting the interests of investors by making sure that public companies provide complete and transparent financial information: A.COSO B.SEC C.FASB D.IASB 57.This governing group created the framework for internal controls evaluations: A.COSO B.SEC C.FASB D.IASB 58.It is necessary that certain stakeholders remain independent related to the corporation’s financial reporting.  Which.
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21.Non-audit services are now prohibited because of the potential to impair the auditor’s objectivity. 22.Even though non-audit services are prohibited by Sarbanes-Oxley, the auditor may perform income tax services for their audit clients if they are pre-approved by the CEO. 23.The auditors report directly to the Board of Directors. 24.The Audit Committee is.
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- CHAPTER 4 – PROBLEMS 182. Explain why an organization should establish and enforce policies for its IT systems in the following areas regarding the use of passwords for log-in: a.Length of password. b.The use of numbers or symbols in passwords. c.Using common words or names as passwords. d.Rotation of passwords. e.Writing passwords on paper or sticky.
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116. What is the primary difference between the Securities Act of 1933 and the Securities Exchange Act of 1934?  117. Why did the SEC establish the PCAOB?  118. Why can auditors no longer be involved in helping their audit clients establish accounting information systems?  119. Under what conditions are auditors permitted to.
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126. Why do corporate leaders see their jobs as more risky since the Sarbanes-Oxley Act became effective?  127. Which governing body holds the top position of management oversight?  128. Identify two ways that companies are making efforts to improve the financial stewardship of their managers.  129. How can IT departments assist corporate.
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127.The data preparation procedures are to be well-defined so that employees will be sure of: A.Which forms to use B.When to use them C.Where to route them D.All of the above 128.Field check, limit check, range check and sequence check are all examples of: A.Input Validation Checks B.Source Document Controls C.Control Reconciliation D.Application Controls 129.This type of input validation check.
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- CHAPTER 5 – END OF CHAPTER QUESTIONS 94.Which of the following is not considered a component of corporate governance? A.Board of Directors Oversight B.IRS Audits C.Internal Audits D.External Audits 95.Good corporate governance is achieved when the interests of which of the following groups are balanced? A.Internal auditors and external auditors B.Shareholders and regulators C.Shareholders, the corporation, and the.
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41.Software should never be implemented before it is tested. 42.It is essential that accountants oversee the data conversion from the old system to the new system to make sure that all accounting data is completely and correctly converted. 43.The file or database storage for the new accounting system may not be different.
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161. What is the difference between business continuity planning and disaster recovery planning? 162. How can a redundant array of independent disks (RAID) help protect the data of an organization?  163. What kinds of duties should be segregated in IT systems?  164. Why do you think the uppermost managers should serve on.
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46.The internal stakeholders who own a portion of the corporation are called: A.Directors B.Shareholders C.Audit Board D.Executives 47.This group of stakeholders should have the highest level of authority related to the company’s objectives and strategies.  Elected by the shareholders, it’s role is to align the interests of the shareholders and management. A.Audit Committee B.Internal Auditors C.Board of.
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136. What is the advantage of studying the current system within the Systems Analysis phase?  137. During the systems analysis phase, which two data collection methods help determine user requirements?  138. What are the advantages of purchased software when compared to software developed in- house?  139. Why might it be important follow.
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76.The establishment of the SEC and the enactment of securities laws were responses to: A.The stock market crash of 1929 and the Great Depression of the 1930s B.Market pressures during the 1980s C.Increased inflation and cost of capital during the 1970s D.High-profile accounting scandals in the early 2000s 77.This legislation was enacted in an effort.
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- CHAPTER 6 – SHORT ANSWER QUESTIONS 131. At the beginning of the chapter, the real world example of Allstate’s IT expenditure is mentioned.  Prior to the implementation of their IT Governance Committee, "whoever spoke the loudest or whoever had the biggest checkbook," got to select IT Projects.  What do you think.
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101.The purpose of this phase of systems design is to create the entire set of specifications necessary to build and implement the system. A.Detailed design B.Evaluation and selection C.Operational design D.Detailed analysis 102.In the detailed design stage of systems design it is necessary that the various parts of the system be designed.  The parts of.
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11.Even though the people and organizations within a community are not directly related to a corporation, they would still be considered one of the stakeholders. 12.Internal auditors should not allow any financial connections to influence the decisions they make about the company’s financial statements or disclosures. 13.Good management oversight involves leaders who.
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