QUIZ NO.

3
ACCOUNTING INFORMATION SYSTEM (AC_AIS)
Chapter 3: Fraud, Ethics and Internal Control

NAME: __________________________________________ SCORE: _______________ RATING:__________

ID NO: ______________________

TRUE OR FALSE
Direction: Read the following statements carefully. Write TRUE if the statement is correct and
FALSE if the statement is incorrect on the space provided before the number.

1. The ethical principle of justice asserts that the benefits of the decision should be
distributed fairly to those who share the risks.
2. Database management fraud includes altering, updating, and deleting an organization’s data.
3. Internal control systems are recommended but not required of firms subject to the Foreign
Corrupt Practices Act.
4. Employees should be made aware of the firm’s commitment to ethics.
5. The ethical principle of informed consent suggests that the decision should be implemented so
as to minimize all of the risks and to avoid any unnecessary risks.
6. Segregation of duties is an example of an internal control procedure.
7. Controls in a computer-based information system are identical to controls in a manual system.
8. A key modifying assumption in internal control is that the internal control system is the
responsibility of management.
9. The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external
auditors.
10. Ethical issues and legal issues are essentially the same.
11. Defalcation is another word for financial fraud.
12. The trend toward distributed data processing increases the exposure to fraud from remote
locations.

MULTIPLE CHOICE
Direction: Analyze the statements carefully. Write the letter of the correct answer on the space
provided before the number.

13. Which ethical principle states that the benefit from a decision must outweigh the risks, and
that there is no alternative decision that provides the same or greater benefit with less
risk?
a. minimize risk c. informed consent
b. justice d. proportionality

14. Individuals who acquire some level of skill and knowledge in the field of computer ethics are
involved in which level of computer ethics?
a. para computer ethics c. theoretical computer ethics
b. pop computer ethics d. practical computer ethics

15. 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

16. Which characteristic is not associated with software as intellectual property?

a. uniqueness of the product
b. possibility of exact replication
c. automated monitoring to detect intruders
d. ease of dissemination

17. All of the following are conditions for fraud except:

a. false representation c. intent
b. injury or loss d. material reliance

18. The four principal types of fraud include all of the following except:
a. bribery c. conflict of interest
b. gratuities d. economic extortion

19. The characteristics of useful information include:

a. summarization, relevance, timeliness, accuracy, and completeness
b. relevance, summarization, accuracy, timelessness, and completeness
c. timeliness, relevance, summarization, accuracy, and conciseness
d. disaggregation, relevance, timeliness, accuracy, and completeness
 20. Internal control system have limitations. These include:
a. possibility of honest error
b. circumvention
c. management override
d. stability of systems

21. An accounting system that maintains an adequate audit trail is implementing which internal
control procedure?
a. access controls c. independent verification
b. segregation of functions d. accounting records

22. Employee fraud involves three steps. Of the following, which is not involved?
a. concealing the crime to avoid detection
b. stealing something of value
c. misstating financial statements
d. converting the asset to a usable form

23. One characteristic of employee fraud is that the fraud

a. is perpetrated at a level to which internal controls do not apply
b. involves misstating financial statements
c. involves the direct conversion of cash or other assets to the employee‟s personal benefit
d. involves misappropriating assets in a series of complex transactions involving third
parties

24. Forces which may permit fraud to occur do not include:

a. a gambling addiction
b. lack of segregation of duties
c. centralized decision making environment
d. questionable integrity of employees

25. Who is responsible for establishing and maintaining the internal control system?
a. the internal auditor
b. the accountant
c. management
d. the external auditor

ESSAY
Answer the question briefly and concisely. Write your answer inside the box provided below.

How has the Sarbanes-Oxley Act had a significant impact on corporate governance? (5 points)

Work hard and follow your dreams,

but never forget where you came from.
BEST LUCK FUTURE ACCOUNTANTS !!!
Prepared by: A&A