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Multiple Choice Questionnaire CIS

The document is a multiple-choice questionnaire focused on auditing current liabilities in a Computer Information System (CIS) environment. It covers key concepts such as the purpose of auditing, risks associated with automated systems, internal controls, and the importance of data integrity and vendor confirmations. The correct answers emphasize the accuracy and completeness of financial reporting for short-term obligations.

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Andrei Barbiran
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Download as DOCX, PDF, TXT or read online on Scribd
6 views

Multiple Choice Questionnaire CIS

The document is a multiple-choice questionnaire focused on auditing current liabilities in a Computer Information System (CIS) environment. It covers key concepts such as the purpose of auditing, risks associated with automated systems, internal controls, and the importance of data integrity and vendor confirmations. The correct answers emphasize the accuracy and completeness of financial reporting for short-term obligations.

Uploaded by

Andrei Barbiran
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Ortega, Sarah O.

Multiple Choice Questionnaire: Audit of Current Liabilities in a CIS


Environment

1. What is the main purpose of auditing current liabilities in a CIS environment?

A) To ensure the accuracy and validity of financial reporting of short-term financial obligations
B) To assess the profitability of a business
C) To determine the long-term investments of the company
D) To verify the overall capital structure of the company

Answer: A) To ensure the accuracy and validity of financial reporting of short-term financial
obligations

2. Which of the following is NOT a typical example of current liabilities?

A) Accounts payable
B) Short-term debt
C) Long-term bonds payable
D) Accrued expenses

Answer: C) Long-term bonds payable

3. What is the primary objective of verifying "completeness" during the audit of current
liabilities?

A) To ensure that all liabilities are accurately valued


B) To confirm that all current liabilities have been identified and reported
C) To ensure that liabilities are classified correctly
D) To verify that liabilities exist as obligations

Answer: B) To confirm that all current liabilities have been identified and reported

4. Which risk is associated with the use of automated systems in the auditing of current
liabilities?

A) Increased manual data entry errors


B) Complexity in tax reporting
C) Automation errors leading to incorrect liability balances
D) Reduced transparency in manual reconciliation processes

Answer: C) Automation errors leading to incorrect liability balances

5. What is the primary purpose of a system walkthrough during an audit of current


liabilities in a CIS environment?
A) To evaluate the efficiency of the software
B) To assess the effectiveness of internal controls and understand how liabilities are recorded
C) To verify that data is backed up regularly
D) To perform external confirmations with vendors

Answer: B) To assess the effectiveness of internal controls and understand how liabilities are
recorded

6. In the context of auditing current liabilities, what does "cut-off testing" primarily focus
on?

A) Verifying that liabilities are recorded at appropriate amounts


B) Ensuring liabilities are recognized in the correct accounting period
C) Checking the classification of liabilities as current or non-current
D) Confirming that liabilities exist and are owed by the company

Answer: B) Ensuring liabilities are recognized in the correct accounting period

7. Which of the following is a major risk when using automated systems for liability
reporting?

A) The system will automatically record liabilities at incorrect amounts due to incorrect
configurations
B) Liabilities will always be recorded in the correct period
C) Manual error is reduced in the reporting process
D) All liabilities will be accurately documented with invoices

Answer: A) The system will automatically record liabilities at incorrect amounts due to incorrect
configurations

8. What is the focus of testing the system’s internal controls in the context of auditing
current liabilities?

A) Ensuring that the financial statements are free of errors


B) Verifying that only authorized personnel can modify liability entries and that the system
processes data accurately
C) Evaluating the company's profitability
D) Confirming that the company complies with legal regulations

Answer: B) Verifying that only authorized personnel can modify liability entries and that the
system processes data accurately

9. When performing "vendor confirmation" as part of substantive testing, which of the


following is most likely being verified?
A) The terms of the liabilities
B) The balances of outstanding liabilities owed to vendors
C) The classification of liabilities as current or non-current
D) The accuracy of foreign currency adjustments

Answer: B) The balances of outstanding liabilities owed to vendors

10. What is the purpose of "data integrity testing" in the audit of current liabilities?

A) To ensure that liabilities are calculated at correct exchange rates


B) To confirm the accuracy and consistency of the data being processed by the system
C) To verify the proper classification of liabilities in financial reports
D) To check whether liabilities are recorded in the appropriate period

Answer: B) To confirm the accuracy and consistency of the data being processed by the system

11. During an audit, why is it important to assess whether liabilities are classified correctly
as current or non-current?

A) To determine the company’s profitability


B) To ensure that financial statements reflect accurate financial obligations
C) To understand the company’s capital structure
D) To evaluate the company's operating efficiency

Answer: B) To ensure that financial statements reflect accurate financial obligations

12. What should auditors do if they find weaknesses in internal controls during the audit of
current liabilities?

A) Ignore the issue, as it does not affect financial reporting


B) Document the weaknesses and consider their impact on financial reporting
C) Immediately report the weakness to the company’s suppliers
D) Make changes to the internal controls themselves

Answer: B) Document the weaknesses and consider their impact on financial reporting

13. What is the potential consequence of a "lack of audit trails" in a CIS environment?

A) Easier identification of financial fraud


B) Difficulty in tracing and verifying liability transactions
C) Reduced need for third-party confirmations
D) Increased accuracy in financial reporting

Answer: B) Difficulty in tracing and verifying liability transactions

14. What is the role of management representations in the audit process?


A) To confirm the correctness of the audit report
B) To provide written assurances regarding the accuracy and completeness of current liabilities
C) To offer detailed explanations for each liability
D) To provide audit evidence for unrecorded liabilities

Answer: B) To provide written assurances regarding the accuracy and completeness of current
liabilities

15. Why is a deep understanding of the underlying technology in a CIS environment


crucial for auditors?

A) To ensure that liabilities are always automatically recorded


B) To determine the profitability of the business
C) To ensure that the liabilities are correctly calculated and reported
D) To assess the operational efficiency of the business

Answer: C) To ensure that the liabilities are correctly calculated and reported

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