1. Auditors’ initial response to computer systems was to audit around the computer. This strategy is least likely to be successful in an audit of
a. A batch processing system for payroll.
b. A card- based system for inventory.
c. An online system for demand deposit accounts.
d. A mark- sense document system for utility billing.

2. Normally, auditors using the ITF technique enter immaterial transactions to minimize the effect on output. This is a disadvantage because
a. Certain limit tests cannot be attempted.
b. The transaction will not appear normal.
c. A special routine will be required in the application system.
d. Designing the test data can be difficult.

Use the following information to answer Questions 15, 16, and 17. Management has requested a special audit of the recently established electronic controls systems division because the last three quarterly profit reports seem to be inconsistent with the division’s cash flow. The division sells customized control systems on a contract basis. A work- in- process record is established for each contract on the WIP master file, which is kept on magnetic disk. Contract charges for materials, labor, and overhead are processed by the WIP computer pro-gram to maintain the WIP master file and to provide billing information. The preliminary audit has revealed that not all costs have been charged against the WIP records. Thus, when contracts are closed, reported profits have been overstated. It is now necessary to determine the reason( s) for this loss of control.

3. Which of the following information systems auditing techniques would be most appropriate to audit the processing accuracy of the WIP computer program in posting transactions to the WIP master file?
a. Control flowcharting
b. Test data
c. Review of program documentation
d. Embedded audit source code

4. Which of the following information systems auditing techniques would be most appropriate to audit the content of the WIP master file that is stored on magnetic disk?
a. Control flowcharting
b. Test data
c. Generalized audit software
d. Embedded audit source code

5. Which of the following information systems auditing techniques would be most appropriate to audit the overall business control context of the WIP computer processing system?
a. Control flowcharting
b. Test data
c. Generalized audit software
d. Embedded audit source code

6. Smith Corporation has numerous customers. A customer file is kept on disk storage. Each customer file contains name, address, credit limit, and account balance. The auditor wishes to test this file to determine whether credit limits are being exceeded. The best procedure for the auditor to follow would be to
a. Develop test data that would cause some account balances to exceed the credit limit and determine if the system properly detects such situations.
b. Develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.
c. Request a printout of all account balances so that they can be checked manually against the credit limits.
d. Request a printout of a sample of account balances so that they can be checked individually against the credit limits.

7. When an auditor tests a computerized accounting system, which of the following is true of the test data approach?
a. Test data are processed by the client’s computer programs under the auditor’s control.
b. Test data must consist of all possible valid and invalid conditions.
c. Testing a program at year- end provides assurance that the client’s processing was accurate for the full year.
d. Several transactions of each type must be tested.

8. An auditor’s objective is to verify the processing accuracy of an application. An information systems audit approach for achieving this objective that avoids contaminating client master files or requiring substantial additional application programming is the
a. Embedded data collection technique.
b. Integrated test facility.
c. Test data method.
d. Snapshot method.

9. Headquarters’ auditors are reviewing a payroll application system via the ITF technique. Which of the following would be used by the auditors?
a. Fictitious names processed with the normal payroll application of the corporation to a dummy entity
b. Fictitious names processed in a separate run through the payroll application of the corporation
c. A sample of last month’s payroll reprocessed through the audit software package to a dummy entity
d. Fictitious names processed through the generalized audit software package with the same company codes

10. Which of the following is true of generalized audit software packages?
a. They can be used only in auditing online computer systems.
b. They can be used on any computer without modification.
c. They each have their own characteristics, which the auditor must consider carefully before using in a given audit situation.
d. They enable the auditor to perform all manual compliance test procedures less expensively.

11. The most important function of generalized audit software is the capability to
a. Access information stored on computer files.
b. Select a sample of items for testing.
c. Evaluate sample test results.
d. Test the accuracy of the client’s calculations.