Pass with AA Practice Materials 100% for sure

An employee of an insurance company processed a fraudulent policy loan application for an amount less than the established level requiring supervisory review. The employee then obtained the cheque and cashed it by forging the endorsement. To prevent the loan's appearance on a subsequent policyholder statement, the loan amount was transferred to a "suspense" account. Which of the following should expose this situation at the earliest date?

• A. A computer report identifying unusual entries to the suspense account.
• B. The use of pre-numbered checks which are periodically accounted for.
• C. Regular reconciliation of the "suspense" account performed by an independent employee.
• D. An annual internal audit.

Indicate the most objective and relevant evidence in a computer environment involving fraud.

• A. Computer logs.
• B. Physical examination.
• C. Inquiries of people.
• D. Physical observation.

Saturn Ltd has offered Jack Lee to be the head of their treasury department during the audit of Saturn Ltd. Jack Lee is the audit manager who is currently in charge of Saturn Ltd. Jack Lee discussed the role with Saturn Ltd and intends to accept the appointment.
Which of the following is a safeguard that the audit firm of Jack Lee should adopt?

• A. Possible intimidation of audit team by manager once position taken up
• B. Manager will be carrying out work whilst negotiating position: might overlook errors
• C. Objectivity and independence could be compromised
• D. Re-review any work of the team previously reviewed by manager/ independent partner review

A payroll clerk with authorised access to the local area network (LAN) was able to update personnel files directly, independent of the application programmes.
The best control to prevent a clerk from doing this would be to

• A. Establish a security policy for the department that prohibits direct updating of data files.
• B. Use password security to authenticate users as they attempt to log on to the LAN.
• C. Restrict access to LAN workstations by such means as automatic lock-up after a predefined period of keyboard inactivity.
• D. Restrict access to and monitor installation of software products or tools having powerful update capabilities.

The following describes the processes which make up the sales system in operation at Shevhrol and Co.
Which of the following processes represents strength or weakness in the system?
(i)Orders are placed by telephone. When a call is received, the person receiving the order checks that the customer's credit status supports the order and that the customer's current balance is below the maximum level and then immediately inputs the order into the system.
(ii)The order automatically generates a message to the distribution centre which despatches the goods and to the accounts department, which immediately raises an invoice and sends it to the customer.
(iii)
Customer queries are dealt with by reception staff.

• A. (i) and (ii) represent strengths and (iii) represents weakness
• B. (ii) represents strength and (i) and (iii) represent weaknesses
• C. All processes represent strengths
• D. (i) represents strength and (ii) and (iii) represent weaknesses