AIS Final Exam Review With 100%
Correct Answers
Intentional or reckless conduct that results in materially misleading financial statements is
called
A) financial fraud.
B) misstatement fraud.
C) fraudulent financial reporting.
D) audit failure fraud. - CORRECT ANSWER✔✔C
Misappropriation of assets is a fraudulent act that involves
A) dishonest conduct by those in power.
B) misrepresenting facts to promote an investment.
C) using computer technology to perpetrate.
D) theft of company property. - CORRECT ANSWER✔✔D
This component of the fraud triangle explains how perpetrators justify their (illegal) behavior.
A) pressure
B) rationalization
C) concealment
D) opportunity - CORRECT ANSWER✔✔B
________ is a simple, yet effective, method for catching or preventing many types of employee
fraud.
A) Requiring all employees to take annual vacations
,B) Monitoring employee bank accounts and net worth
C) Monitoring employee behavior using video cameras
D) Explaining that fraud is illegal and will be severely punished to employees - CORRECT
ANSWER✔✔A
Why are threats to accounting information systems increasing?
A) Many companies do not realize that data security is crucial to their survival.
B) LANs and client/server systems are easier to control than centralized, mainframe systems.
C) Many companies believe that protecting information is a strategic requirement.
D) Computer control problems are often overestimated and overly emphasized by management.
- CORRECT ANSWER✔✔A
Identify the preventive control below.
A) reconciling the bank statement to the cash control account
B) approving customer credit prior to approving a sales order
C) maintaining frequent backup records to prevent loss of data
D) counting inventory on hand and comparing counts to the perpetual inventory records -
CORRECT ANSWER✔✔B
Which of the below is not a component of the COSO ERM?
A) monitoring
B) control environment
C) risk assessment
D) compliance with federal, state, or local laws - CORRECT ANSWER✔✔D
The largest differences between the COSO Integrated Control (IC) framework and the COSO
Enterprise Risk Management (ERM) framework is
, A) IC is controls-based, while the ERM is risk-based.
B) IC is risk-based, while ERM is controls-based.
C) IC is required, while ERM is optional.
D) IC is more applicable to international accounting standards, while ERM is more applicable to
generally accepted accounting principles - CORRECT ANSWER✔✔A
The first step of the risk assessment process is generally to
A) identify controls to reduce all risk to zero.
B) estimate the exposure from negative events.
C) identify the threats that the company currently faces.
D) estimate the risk probability of negative events occurring - CORRECT ANSWER✔✔C
________ remains after management implements internal control(s).
A) Inherent risk
B) Residual risk
C) Risk appetite
D) Risk assessment - CORRECT ANSWER✔✔B
________ is the risk that exists before management takes any steps to mitigate it.
A) Inherent risk
B) Residual risk
C) Risk appetite
D) Risk assessment - CORRECT ANSWER✔✔A
How is expected loss calculated when performing risk assessment?
A) impact times expected loss
Correct Answers
Intentional or reckless conduct that results in materially misleading financial statements is
called
A) financial fraud.
B) misstatement fraud.
C) fraudulent financial reporting.
D) audit failure fraud. - CORRECT ANSWER✔✔C
Misappropriation of assets is a fraudulent act that involves
A) dishonest conduct by those in power.
B) misrepresenting facts to promote an investment.
C) using computer technology to perpetrate.
D) theft of company property. - CORRECT ANSWER✔✔D
This component of the fraud triangle explains how perpetrators justify their (illegal) behavior.
A) pressure
B) rationalization
C) concealment
D) opportunity - CORRECT ANSWER✔✔B
________ is a simple, yet effective, method for catching or preventing many types of employee
fraud.
A) Requiring all employees to take annual vacations
,B) Monitoring employee bank accounts and net worth
C) Monitoring employee behavior using video cameras
D) Explaining that fraud is illegal and will be severely punished to employees - CORRECT
ANSWER✔✔A
Why are threats to accounting information systems increasing?
A) Many companies do not realize that data security is crucial to their survival.
B) LANs and client/server systems are easier to control than centralized, mainframe systems.
C) Many companies believe that protecting information is a strategic requirement.
D) Computer control problems are often overestimated and overly emphasized by management.
- CORRECT ANSWER✔✔A
Identify the preventive control below.
A) reconciling the bank statement to the cash control account
B) approving customer credit prior to approving a sales order
C) maintaining frequent backup records to prevent loss of data
D) counting inventory on hand and comparing counts to the perpetual inventory records -
CORRECT ANSWER✔✔B
Which of the below is not a component of the COSO ERM?
A) monitoring
B) control environment
C) risk assessment
D) compliance with federal, state, or local laws - CORRECT ANSWER✔✔D
The largest differences between the COSO Integrated Control (IC) framework and the COSO
Enterprise Risk Management (ERM) framework is
, A) IC is controls-based, while the ERM is risk-based.
B) IC is risk-based, while ERM is controls-based.
C) IC is required, while ERM is optional.
D) IC is more applicable to international accounting standards, while ERM is more applicable to
generally accepted accounting principles - CORRECT ANSWER✔✔A
The first step of the risk assessment process is generally to
A) identify controls to reduce all risk to zero.
B) estimate the exposure from negative events.
C) identify the threats that the company currently faces.
D) estimate the risk probability of negative events occurring - CORRECT ANSWER✔✔C
________ remains after management implements internal control(s).
A) Inherent risk
B) Residual risk
C) Risk appetite
D) Risk assessment - CORRECT ANSWER✔✔B
________ is the risk that exists before management takes any steps to mitigate it.
A) Inherent risk
B) Residual risk
C) Risk appetite
D) Risk assessment - CORRECT ANSWER✔✔A
How is expected loss calculated when performing risk assessment?
A) impact times expected loss
