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RAMON MAGSAYSAY MEMORIAL COLLEGES

PIONEER AVENUE, GENERAL SANTOS CITY


College of Accountancy

Auditing EDP Systems

Test I – Give the correct terms for each of the statement given below. Write your answer in a one
half size piece of paper.
1. This locational change of computer received data that have been entered on a terminal in the
customer’s office and transmitted via a data communication system. The data are processed and
the results are transmitted back over the data communication system to be printed on the client’s
terminal.

2. The auditors’ first response to the computers was to treat them as if they were mechanical
bookkeeping systems. The auditors’ could readily see the old balance, add or subtract the posting
as appropriate, and compare the balance with the correct amount computed manually.

3. A processing system that permits the data to be submitted to a computer from a terminal in one
location and to be posted to accounts on files in a second location, with the results being printed in
the third location.

4. The major function of this system is the linking together of various files. This system reduce
redundancies in the submission of data and managing input to the files, changes in the files,
including output from them which creates problem for auditor to experience difficulty of tracing
transactions forward and backward.

5. These programs also schedule jobs on priority basis, handle all input to and output from reading and
writing devices, and perform special functions as sorting records into a particular order.

6. A change in processing of accounting data that occurred in the areas of languages, applications,
operating systems, and data-base management system.

7. This computer generation is characterized by artificial intelligence that is constantly learning and
modifying itself which creates problems that are mind boggling.

8. Defined as those documents, records, journals, ledgers, magnetic medium transaction and master
files, and accounting reports that enable an auditor to trace a transaction from source document to
summarized total in an accounting report, or vice versa.

9. A system of processing accounting data in which source documents are posted by hand to sales,
cash receipts, and other types of journals. Totals of journals are then hand-posted to the general
ledger. Reports are then manually prepared from the general ledger or a working trial balance taken
from the general ledger.

10. A collection of data files containing an organization’s records, like payroll and accounts receivable
files which the earnings record for each employee and an accounts receivable subsidiary ledger for
each customer.

11. This changes in the location of computers enhanced the organization’s internal control of processing
transaction through separation of functions occurring as custody of the computer is separated from
the accounting department user.

12. Auditors utilized the computers as a tool in performing tasks such as to work footing subsidiary
ledgers on magnetic tape or disk, calculating amounts such as depreciation, comparing the contents
of two files, examining files for missing amounts such as credit limits, and printing confirmations.

13. This requires the auditor to apply CAAT’s since the complexity of processing accounting data
through EDP system ultimately reached the point where auditors could no longer audit around the
computer. The auditor is forced to treat the computer as the target of the audit.

14. These controls include input controls, processing controls, and output controls, to ensure that
accurate data are submitted to the computer, and that no errors are made during the processing of
data and to generate output that reconciles to the input and to be distributed properly to appropriate
authorized personnel.

15. These are organization and operation control of EDP department, controls on the development and
implementation of computer programs including its changes, as well as the controls built into the
equipment and software by the vendor to ensure processing accuracy, to prevent unauthorized
access to equipment, and other data and processing controls.

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RAMON MAGSAYSAY MEMORIAL COLLEGES
PIONEER AVENUE, GENERAL SANTOS CITY
College of Accountancy

Auditing EDP Systems

Test II – Select the letter that represents the correct answer. Letters must be written in capital
letter.
16. The following are the changes in hardware used to process accounting data, except:
a. Use of Unit Record Equipment and Bookkeeping Machine to process data.
b. Use of electronics to process data.
c. Development of machine level languages referred to as assembler and higher-level
languages.
d. The processing of accounting data by transmitting those data over a communication channel,
such as telephone lines, microwave, or satellite.
17. Which of the following will not be performed by Operating System?
a. Perform specialized functions as sorting records into a particular order.
b. Control input to the files, changes in the files, and abstraction of information from the files.
c. Schedule jobs on a priority basis.
d. Handle all input to an output from reading and writing devices
18. Application program for today performs the following tasks almost instantaneously, except:
a. Preparation or purchase order to restock inventory if level has fallen below reorder point.
b. Approval of order based on customer credit limits, amount currently receivable from
customer, and back-order file.
c. Manage or supervise all the activities associated with a computer system.
d. Updating of perpetual inventory records
19. The following problems were brought by the changes in location of Data Processing System
a. Extend the scope of audit
b. Inaccessibility to programs, files, and data processing personnel.
c. Potential loss of assets from unauthorized access to programs and files.
d. Requires the auditor may to travel extensively to collect evidence.
20. Auditing around the computer
a. Requires the auditor to submit data to the computer for processing.
b. Force the auditor to treat the computer as the target of the audit.
c. Analyse the processing reliability and accuracy of the computer program.
d. Auditors traced transactions to the black box and then picked-up the trail on the other side by
examining print-outs.
21. Application controls include:
a. Transactions submitted to the computer is correct, properly validated, approved and
authorized.
b. Use of password to prevent unauthorized access to equipment.
c. Output reconciles with the input.
d. Output were distributed to authorized personnel.
22. A management information system
a. Can only exist with computers
b. Primarily processes data and procedures reports
c. Supports the operations, management, and decision-making function in an organization
d. Is a single large system in an organization
23. The primary functions of a computerized information system include
a. Input, processing, outputs, and storage
b. Input, processing, output, and control
c. Input, processing, output, storage, and control
d. Collecting, sorting, summarizing, and reporting
24. Some electronic data processing control procedures relate to all electronic data processing activities
(general control) and some relates to specific tasks (application controls). General controls include
a. Control designed to ascertain that all data submitted to electronic data processing for
processing have been properly authorized.
b. Controls that relate to the correction and resubmission of data that were initially incorrect.
c. Controls documenting and approving programs and changes to programs.
d. Controls designed to assure the accuracy of the processing results .
25. All of the of the following are example of computer software except a (n)
a. Operating system
b. Word processing package
c. Language translator
d. Telephone modem

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