In a manufacturing organization, all sales prices are determined centrally and are electronically sent to the distribution centers to update their sales price tables.
Any pricing deviations must be approved by central headquarters. To determine how this process is functioning, an internal auditor should:
Answer : A
It would be appropriate for an internal audit activity to use consultants with expertise in health-care benefits when the internal audit activity is:
I. Conducting an audit of the organization's estimate of its liability for post retirement benefits, which include health care benefits.
II. Comparing the cost of the organization's health care program with that of other programs offered in the industry.
III. Training its staff to conduct an audit of health care costs in a major division of the organization.
Answer : D
To assure that the technical proficiency of internal auditors is appropriate for the audit engagements to be performed, a chief audit executive should:
Answer : A
Which of the following best describes the most important criteria when assigning responsibility for specific tasks required in an audit engagement?
Answer : B
In advance of a preliminary survey, a chief audit executive sends a memorandum and questionnaire to the supervisors of the department to be audited. What is the most likely result of that procedure?
Answer : B
Which of the following steps would not be included in a program of selecting and developing human resources for an internal audit department?
Answer : B
Auditors 1, 2, and 3 work out of various offices. Each must be assigned to one, and only one, of three audit locations (A, B, or C). The cost of sending each auditor to each location is listed below:
Audit Locations -
Auditor 1 -
A -
B -
C -
Auditor 2 -
$200
$300
$400
Auditor 3 -
$400
$300
$600
Auditor 4 -
$200
$200
$500
The minimum cost with which this assignment can be accomplished is:
Answer : B
An audit of the quality control department is being planned. Which of the following would least likely be used in the preparation of a preliminary survey questionnaire?
Answer : A
An objective for an audit of a medical research corporation is to evaluate management's controls to ensure that timely reports are submitted to sponsors of contracted research projects. In planning the audit to achieve this objective, the auditor should begin by:
Answer : A
Which of the following internal control weaknesses would an auditor most likely detect while reviewing a flowchart that depicts the purchasing function of an organization?
Answer : D
Which source of audit evidence would provide the least value in flowcharting an organization's purchasing process?
Answer : B
Internal auditors exercise judgment about the type and amount of information to be collected. The primary purpose of this judgment is to:
Answer : D
Which of the following is a benefit from reduced testing during a particular phase of an audit engagement?
Answer : D
Which of the following would be the least desirable criteria against which to judge current operations of a company's treasury function?
Answer : A
A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days. What conditions would an auditor look for as an indicator of employee theft of food from a specific store?
Answer : B