Today's question: AUD

To obtain evidence that user identification and password controls are functioning as designed, an auditor would most likely:

A)   Attempt to sign-on to the system using invalid user identifications and passwords.

B)   Write a computer program that simulates the logic of the client's access control software.

C)   Extract a random sample of processed transactions and ensure that the transactions were appropriately authorized.

D)   Examine statements signed by employees stating that they have not divulged their user identifications and passwords to any other person.

Correct Answer: A

Explanation: The correct choice is to attempt to sign-on to the system using invalid user identifications and passwords. This will provide the auditor with the most competent evidence that the user identification and password controls are functioning as designed. The other answers do not relate directly to actual system access; they refer to programming, authorization and written statements.

Today's question: REG

Noll gives Carr a written power of attorney. Which of the following statements is correct regarding this power of attorney?

A)   It must be signed by both Noll and Carr.

B)   It must be for a definite period of time.

C)   It may continue in existence after Noll's death.

D)   It may limit Carr's authority to specific transactions.

Correct Answer: D

Explanation: A power of attorney usually limits an agent's authority to specific transactions.

The remaining answer choices are incorrect for the following reasons:

• A power of attorney need only be signed by the principal, not the principal and the agent.
• A power of attorney may be for an indefinite period of time.
• Death of the principal terminates most agencies, to specifically include a power of attorney.

Today's question: FAR

On December 1, 2009, Line Corp. received a donation of 2,000 shares of its $5 par value common stock from a stockholder. On that date, the stock's market value was $35 per share. The stock was originally issued for $25 per share. By what amount would this donation cause total stockholders' equity to decrease?

A)   $70,000

B)   $50,000

C)   $20,000

D)   $0