Chapter 2- auditing it governance Controls


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IT Auditing 4th Ed—Test Bank, Chapter 2

Chapter 2— Auditing IT Governance Controls

TRUE/FALSE

1. To fulfill the segregation of duties control objective, computer processing functions (like authorization of credit and billing) are separated.

ANS: F PTS: 1

2. To ensure sound internal control, program coding and program processing should be separated.

ANS: T PTS: 1

3. Some systems professionals have unrestricted access to the organization's programs and data.

ANS: T PTS: 1

4. 44IT governance focuses on the management and assessment of strategic IT resources
ANS: T PTS: 1

5. Distributed data processing places the control IT recourses under end users.
ANS: T PTS: 1
6. An advantage of distributed data processing is that redundant tasks are greatly eliminated
ANS: F PTS: 1
7. Certain duties that are deemed incompatible in a manual system may be combined in a computer-based information system environment.
ANS: T PTS: 1
8. To improve control and efficiency, new systems development and program maintenance should be performed by the same individual or group.
ANS: F PTS: 1
9. Distributed data processing reduces the risk of operational inefficiencies.

ANS: F PTS: 1
10. The database administrator should be separated from systems development.

ANS: T PTS: 1

11. A disaster recovery plan is a comprehensive statement of all actions to be taken after a disaster.

ANS: T PTS: 1
12. RAID is the use of parallel disks that contain redundant elements of data and applications.

ANS: T PTS: 1
13. Transaction cost economics (TCE) theory suggests that firms should outsource specific noncore IT assets
ANS: F PTS: 1
14. Commodity IT assets easily acquired in the marketplace and should be outsourced under the core competency theory.
ANS: F PTS: 1
15. A database administrator is responsible for the receipt, storage, retrieval, and custody of data files.
ANS: F PTS: 1
16. Virtualization is the technology that unleased cloud computing.
ANS: T PTS: 1
17. Fault tolerance is the ability of the system to continue operation when part of the system fails due to hardware failure, application program error, or operator error.
ANS: T PTS: 1
18. An often-cited benefit of IT outsourcing is improved core business performance.
ANS: T PTS: 1
19. Commodity IT assets include such things are network management.
ANS: T PTS: 1
20. Specific IT assets support an organization’s strategic objectives.
ANS: T PTS: 1
21. A generally accepted advantage of IT outsourcing is improved security.
ANS: F PTS: 1
22. An advantage of distributed data processing is that individual end user groups set specific IT standards without concern for the broader corporate needs.
ANS: F PTS: 1
23. A mutual aid is the lowest cost disaster recovery option, but has shown to be effective and low risk.
ANS: F PTS: 1
24. Critical applications should be identified and prioritized by the user departments, accountants, and auditors.
ANS: T PTS: 1
25. A ROC is generally shared with multiple companies.
ANS: T PTS: 1


MULTIPLE CHOICE

1. All of the following are issues of computer security except

a.

releasing incorrect data to authorized individuals

b.

permitting computer operators unlimited access to the computer room

c.

permitting access to data by unauthorized individuals

d.

providing correct data to unauthorized individuals


ANS: B PTS: 1

2. Segregation of duties in the computer-based information system includes

a.

separating the programmer from the computer operator

b.

preventing management override

c.

separating the inventory process from the billing process

d.

performing independent verifications by the computer operator


ANS: A PTS: 1

3. In a computer-based information system, which of the following duties needs to be separated?

a.

program coding from program operations

b.

program operations from program maintenance

c.

program maintenance from program coding

d.

all of the above duties should be separated


ANS: D PTS: 1

4. Participation in system development activities include:

a.

system analysts, database designers and programmers

b.

managers and operating personnel who work directly with the system

c.

accountants and auditors

d.

all of the above


ANS: D PTS: 1

5. Adequate backups will protect against all of the following except

a.

natural disasters such as fires

b.

unauthorized access

c.

data corruption caused by program errors

d.

system crashes


ANS: B PTS: 1

6. Which is the most critical segregation of duties in the centralized computer services function?

a.

systems development from data processing

b.

data operations from data librarian

c.

data preparation from data control

d.

data control from data librarian


ANS: A PTS: 1

7. Systems development is separated from data processing activities because failure to do so

a.

weakens database access security

b.

allows programmers access to make unauthorized changes to applications during execution

c.

results in inadequate documentation

d.

results in master files being inadvertently erased


ANS: B PTS: 1

8. Which organizational structure is most likely to result in good documentation procedures?

a.

separate systems development from systems maintenance

b.

separate systems analysis from application programming

c.

separate systems development from data processing

d.

separate database administrator from data processing


ANS: A PTS: 1

9. All of the following are control risks associated with the distributed data processing structure except

a.

lack of separation of duties

b.

system incompatibilities

c.

system interdependency

d.

lack of documentation standards


ANS: C PTS: 1


10. Which of the following is not an essential feature of a disaster recovery plan?

a.

off-site storage of backups

b.

computer services function

c.

second site backup

d.

critical applications identified


ANS: B PTS: 1

11. A cold site backup approach is also known as

a.

internally provided backup

b.

recovery operations center

c.

empty shell

d.

mutual aid pact


ANS: C PTS: 1

12. The major disadvantage of an empty shell solution as a second site backup is

a.

the host site may be unwilling to disrupt its processing needs to process the critical applications of the disaster stricken company

b.

recovery depends on the availability of necessary computer hardware

c.

maintenance of excess hardware capacity

d.

the control of the shell site is an administrative drain on the company


ANS: B PTS: 1

13. An advantage of a recovery operations center is that

a.

this is an inexpensive solution

b.

the initial recovery period is very quick

c.

the company has sole control over the administration of the center

d.

none of the above are advantages of the recovery operations center


ANS: B PTS: 1

14. For most companies, which of the following is the least critical application for disaster recovery purposes?

a.

month-end adjustments

b.

accounts receivable

c.

accounts payable

d.

order entry/billing


ANS: A PTS: 1

15. The least important item to store off-site in case of an emergency is

a.

backups of systems software

b.

backups of application software

c.

documentation and blank forms

d.

results of the latest test of the disaster recovery program


ANS: D PTS: 1

16. Some companies separate systems analysis from programming/program maintenance. All of the following are control weaknesses that may occur with this organizational structure except

a.

systems documentation is inadequate because of pressures to begin coding a new program before documenting the current program

b.

illegal lines of code are hidden among legitimate code and a fraud is covered up for a long period of time

c.

a new systems analyst has difficulty in understanding the logic of the program

d.

inadequate systems documentation is prepared because this provides a sense of job security to the programmer


ANS: C PTS: 1

17. All of the following are recommended features of a fire protection system for a computer center except

a.

clearly marked exits

b.

an elaborate water sprinkler system

c.

manual fire extinguishers in strategic locations

d.

automatic and manual alarms in strategic locations


ANS: B PTS: 1
18. All of the following tests of controls will provide evidence about the physical security of the computer center except

a.

review of fire marshal records

b.

review of the test of the backup power supply

c.

verification of the second site backup location

d.

observation of procedures surrounding visitor access to the computer center


ANS: C PTS: 1

19. All of the following tests of controls will provide evidence about the adequacy of the disaster recovery plan except

a.

inspection of the second site backup

b.

analysis of the fire detection system at the primary site

c.

review of the critical applications list

d.

composition of the disaster recovery team


ANS: B PTS: 1
20. The following are examples of commodity assets except

a.

network management

b.

systems operations

c.

systems development

d.

server maintenance


ANS: C PTS: 1

21. Which of the following is NOT an example of a specific assets?

a. application maintenance

b. data warehousing

c. highly skilled employees

d. server maintenance
ANS: D PTS: 1
22. Which of the following is true?

a. Core competency theory argues that an organization should outsource specific core assets.

b. Core competency theory argues that an organization should focus exclusively on its core business competencies

c. Core competency theory argues that an organization should not outsource specific commodity assets.

d. Core competency theory argues that an organization should retain certain specific noncore assets in-house.
ANS: B PTS: 1
23. Which of the following is not true?

  1. Large-scale IT outsourcing involves transferring specific assets to a vendor

  2. Specific assets, while valuable to the client, are of little value to the vendor

  3. Once an organization outsources its specific assets, it may not be able to return to its pre-outsource state.

  4. Specific assets are of value to vendors because, once acquired, vendors can achieve economies of scale by employing them with other clients


ANS: D PTS: 1
24. Which of the following is not true?

  1. When management outsources their organization’s IT functions, they also outsource responsibility for internal control.

  2. Once a client firm has outsourced specific IT assets, its performance becomes linked to the vendor’s performance.

  3. IT outsourcing may affect incongruence between a firm’s IT strategic planning and its business planning functions.

  4. The financial justification for IT outsourcing depends upon the vendor achieving economies of scale.


ANS: A PTS: 1

25. Which of the following is not true?

  1. Management may outsource their organizations’ IT functions, but they cannot outsource their management responsibilities for internal control.

  2. Section 404 requires the explicit testing of outsourced controls.

  3. The SSAE 16 report, which is prepared by the outsourcer’s auditor, attests to the adequacy of the vendor’s internal controls.

  4. Auditors issue two types of SSAE 16 reports: Type I report and Type II report.


ANS: C PTS: 1
26. Segregation of duties in the computer-based information system includes

a.

separating the programmer from the computer operator

b.

preventing management override

c.

separating the inventory process from the billing process

d.

performing independent verifications by the computer operator


ANS: A PTS: 1
27. A disadvantage of distributed data processing is

a. the increased time between job request and job completion.

b. the potential for hardware and software incompatibility among users.

c. the disruption caused when the mainframe goes down.

d. that users are not likely to be involved.
ANS: B PTS: 1
28. Which of the following is NOT a control implication of distributed data processing?

a. redundancy

b. user satisfaction

c. incompatibility

d. lack of standards
ANS: B PTS: 1
29. Which of the following disaster recovery techniques may be least optimal in the case of a disaster?

a. empty shell

b. mutual aid pact

c. recovery operation center

d. they are all equally beneficial
ANS: B PTS: 1
30. Which of the following is a feature of fault tolerance control?

a. interruptible power supplies

b. RAID

c. DDP

d. MDP
ANS: B PTS: 1

31. Which of the following disaster recovery techniques is has the least risk associated with it?

a. empty shell

b. ROC

c. internally provided backup

d. they are all equally risky
ANS: C PTS: 1
32. Cloud computing

a. pools resources to meet the needs of multiple client firms

b. allows clients to expand and contract services almost instantly

c. both a. and b.

d. neither a. not b.
ANS: C PTS: 1
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