Page 169 - Accounting Information Systems

140 PART I Overview of Accounting Information Systems

22. Why are the computer ethics issues of privacy, se- 27. Explain the problems associated with lack of direc-
curity, and property ownership of interest to tor independence.
accountants? 28. Explain the problems associated with questionable
23. A profile of fraud perpetrators prepared by the executive compensation schemes.
Association of Certified Fraud Examiners revealed 29. Explain the problems associated with inappropri-
that adult males with advanced degrees commit a ate accounting practices.
disproportionate amount of fraud. Explain these
30. Explain the purpose of the Public Company
findings.
Accounting Oversight Board.
24. Explain why collusion between employees and
31. Why is an independent audit committee important
management in the commission of a fraud is diffi-
to a company?
cult to both prevent and detect.
32. What are the key points of the ‘‘Issuer and
25. Because all fraud involves some form of financial
Management Disclosure’’ of the Sarbanes-
misstatement, how is fraudulent statement fraud
Oxley Act?
different?
33. In this age of high technology and computer-based
26. Explain the problems associated with lack of audi-
information systems, why are accountants con-
tor independence.
cerned about physical (human) controls?
Multiple-Choice Questions

1. Management can expect various benefits to follow e. The accounting clerk who shares the record-
from implementing a system of strong internal keeping responsibility for the accounts receiva-
control. Which of the following benefits is least ble subsidiary ledger performs the monthly rec-
likely to occur? onciliation of the subsidiary ledger and the
a. reduction of cost of an external audit control account.
b. prevention of employee collusion to commit 3. The underlying assumption of reasonable assur-
fraud ance regarding implementation of internal control
means that
c. availability of reliable data for decision-making
purposes a. auditor is reasonably assured that fraud has not
occurred in the period.
d. some assurance of compliance with the Foreign
Corrupt Practices Act of 1977 b. auditors are reasonably assured that employee
carelessness can weaken an internal control
e. some assurance that important documents and
structure.
records are protected
c. implementation of the control procedure
2. Which of the following situations is NOT a segre-
should not have a significant adverse effect on
gation of duties violation?
efficiency or profitability.
a. The treasurer has the authority to sign checks
d. management assertions about control effective-
but gives the signature block to the assistant
ness should provide auditors with reasonable
treasurer to run the check-signing machine.
assurance.
b. The warehouse clerk, who has custodial
e. a control applies reasonably well to all forms of
responsibility over inventory in the warehouse,
computer technology.
selects the vendor and authorizes purchases
when inventories are low. 4. To conceal the theft of cash receipts from custom-
ers in payment of their accounts, which of the fol-
c. The sales manager has the responsibility to
lowing journal entries should the bookkeeper
approve credit and the authority to write off
make?
accounts.
d. The department time clerk is given the undis- DR CR
tributed payroll checks to mail to absent a. Miscellaneous Expense Cash
employees. b. Petty Cash Cash