ystems to those associated with centralized IT functions. TIRS ASSociated with network systems and database 11-19 (oRJECTIVE 1L-5) An audit dient is creating an online, Web-based sales ordering sys tem for customers to purchase products using personal credit cards for payment three risks related to an online sales system that management should consider. For ea for payment. Identify risk, identify an internal control that could be implemented to reduce that risk. MULTIPLE CHOICE QUESTIONS FROM CPA EXAMINATIONS 11-20 (OBJECTIVES 11-1, 112, 11-3) The following are general questions about internal con trol. Choose the best response. a. Which of the following would not be considered an inherent limitation of the poten- tial effectiveness of an entity's internal control structure? (1) Incompatible duties (2) Management override (3) Mistakes in judgment (4) Collusion among employees directors, and owners of the entity about internal control relate to which of the fol- 2 Control encoetity about it attig lowing internal control components? (1) Control environment b. Actions, policies, and procedures that reflect the overall attitude of management, (3) Risk assessment (2) Information and communication (4) Monitoring c. Vendor account reconciliations are performed by three clerks in the accounts pay- able department on Friday of each week. The accounts payable supervisor reviews the completed reconciliations the following Monday to ensure they have been completed. The work performed by the supervisor is an example of which COSO component? (1) Control activities (2) Information and communication(4) Monitoring (3) Risk assessment 11-21 (OBJECTIVES 11-4,11-9) The following questions concern the characteristics of IT sys- tems and their impact on internal controls. Choose the best response. a. Which of the following is an advantage of a computer-based system for transaction processing over a manual system? A computer-based system does not require as stringent a set of internal controls. will produce a more accurate set of financial 1) (2) (3) will be more efficient in generating financial statements (4) eliminates the need to reconcile control accounts and subsidiary ledgers statements b. Which of the following is an example of an application control? The client uses access security software to limit access to each o applications. Employees are assigned a user ID and password that must be changed every The sales system automatically computes the total sale amount and p tal to the sales journal master file. (1) e accounti ng (2) (3) osts the to- (4) Systems programmers are restricted from doing applications e. Which of the following is generally not considered a category of IT general controls? Controls that determine whether a vendor number matches the pre-approved vendors in the vendor master file Controls that restrict system-wide access to programs and data Controls that oversee the acquisition of application software Controls that oversee the day-to-day operation of IT applicati (3) (4) AUDIT PROCESS