Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement v8.0 (IIA-CIA-Part2)

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Total 508 questions

An auditor is using an internal control questionnaire as part of a preliminary survey. Which of the following is the best reason for the auditor to interview management regarding the questionnaire responses?

  • A. Interviews provide the opportunity to insert questions to probe promising areas.
  • B. Interviews are the most efficient way to upgrade the information to the level of objective evidence.
  • C. Interviewing is the least costly audit technique when a large amount of information is involved.
  • D. Interviewing is the only audit procedure which does not require confirmation of the information that is obtained.


Answer : A

Which of the following would provide the greatest assurance of the accuracy of a computer program's computation of freight charges for catalog sales?

  • A. Use discovery sampling, selecting transactions from invoices which should have freight charges added to them.
  • B. Use either test data or parallel simul-ation to test the computer application.
  • C. Use difference estimation, selecting transactions from invoices which should have freight charges added to them.
  • D. Use generalized audit software to select a monetary-unit sample of invoices that have been billed to customers.


Answer : B

Many questionnaires are made up of a series of different questions that use the same response categories (for example: strongly agree, agree, neither, disagree, strongly disagree). Some designs will have different groups of respondents answer alternate versions of the questionnaire that present the questions in different orders and reverse the orientation of the endpoints of the scale (for example: agree on the right and disagree on the left). The purpose of such questionnaire variations is to:

  • A. Eliminate intentional misrepresentations.
  • B. Reduce the effects of pattern response tendencies.
  • C. Test whether respondents are reading the questionnaire.
  • D. Make it possible to get information about more than one population parameter using the same questions.


Answer : B

Which of the following will be an appropriate course of action when an auditor disagrees with a client about a well-documented audit finding?

  • A. Include both the audit finding and the client's position in the audit report.
  • B. Defer reporting the item and plan to perform more detailed work during the next audit.
  • C. Change the finding so that it is acceptable to the client.
  • D. Address the issue with senior management and the board for resolution prior to issuing the final report.


Answer : A

If an organization's chief audit executive wants to implement continuous auditing, what is the appropriate order in which key steps should be undertaken?
I. Identify business applications that require access.
II. Implement steps to continuously assess risks and controls.
III. Define objectives of continuous auditing.
IV. Manage and report results.

  • A. III, I, IV, II.
  • B. II, I, III, IV.
  • C. III, I, II, IV.
  • D. II, III, I, IV.


Answer : C

During an audit of executive travel, an auditor noted that the president's travel expense reimbursements were approved by an executive secretary who reported to the president.
The organization's reimbursement policy requires all travel expense reimbursements to be approved by the traveler's supervisor, but it does not address the president's reimbursements. Which of the following represents the auditor's best recommendation in this situation?

  • A. The organization's reimbursement policy should be amended to grant the president's executive secretary the authority to approve the president's travel expense reimbursements.
  • B. The approval policy for executive travel should be considered at the next meeting of the audit committee of the board of directors.
  • C. The president's travel expense reimbursements should be reviewed and approved by the chief financial officer.
  • D. The president's noncompliance should be considered immaterial.


Answer : B

An audit of management's quality program includes testing the accuracy of the cost-of- quality reports provided to management. Which of the following internal control objectives is the focus of this testing?

  • A. To ensure compliance with policies, plans, procedures, laws, and regulations.
  • B. To ensure the accomplishment of established objectives and goals for operations or programs.
  • C. To ensure the reliability and integrity of information.
  • D. To ensure the economical and efficient use of resources.


Answer : C

During the development of a purchasing system, an auditor reviewed the payment authorization program. Which of the following actions should the auditor recommend for a situation in which the quantity invoiced is greater than the quantity received?

  • A. Issue an exception report.
  • B. Pay the amount billed and adjust the inventory account for the difference.
  • C. Return the invoice to the vendor for correction.
  • D. Authorize payment of the full invoice, but maintain an open purchase order record for the missing goods.


Answer : A

An internal auditor is discussing an audit problem with an engagement client. While listening to the client, the internal auditor should:

  • A. Prepare a response to the client.
  • B. Take mental notes on the speaker's nonverbal communication, as it is more important than what is being said.
  • C. Make sure that all details, as well as the main ideas of the client, are remembered.
  • D. Integrate the incoming information from the client with information that is already known.


Answer : D

A manufacturing process could create hazardous waste at several production stages, from raw materials handling to finished goods storage. If the objective of a pollution prevention audit engagement is to identify opportunities for minimizing waste, in what order should the following opportunities be considered?
I. Recycling and reuse.
II. Elimination at the source.
III. Energy conservation.
IV. Recovery as a usable product Treatment.

  • A. V, II, IV, I, III.
  • B. IV, II, I, III, V.
  • C. I, III, IV, II, V.
  • D. III, IV, II, V, I.


Answer : B

An auditor decides to perform an inventory turnover analysis for both raw materials inventory and finished goods inventory. The analysis would be potentially useful in:
I. Identifying products for which management has not been attuned to changes in market demand.
II. Identifying potential problems in purchasing activities.
III. Identifying obsolete inventory.

  • A. III only
  • B. I and II only
  • C. II and III only
  • D. I, II, and III


Answer : D

The following is an excerpt from an audit engagement workpaper:
-> A Company
-> Accounts Receivable
-> Date
Objective. To determine if the computer system is correctly recording all accounts receivable transactions.
Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances.
Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects.
Which of the following is true regarding the workpaper?

  • A. It is not appropriate to judgmentally select a sample when testing accounts receivable.
  • B. A conclusion should be reached only for the results of overall testing, not for individual procedures.
  • C. The audit procedures used are not consistent with the audit objective.
  • D. The format of the workpaper does not conform to the standard format for workpapers.


Answer : C

A company's policy requires that all customers be treated in a fair and consistent manner.
Which of the following audit procedures would provide the most persuasive evidence that the policy was followed?

  • A. Compare the aging of outstanding receivables due from each customer.
  • B. Compare credit reports with annual sales for a sample of customers.
  • C. Compare the ratio of outstanding receivables to the authorized credit limit for each customer.
  • D. Compare the sales discounts offered to each customer.


Answer : D

What does the following scatter gram suggest?

  • A. Sales revenue is related to training costs.
  • B. The training program is not effective.
  • C. Increases in training costs consistently increase sales revenue.
  • D. One data point is incorrectly plotted.


Answer : A

A film company determined that income level impacts the number of films that people watch per month, as shown by the graph below:
The graph indicates that:

  • A. A richer person always sees more films than a poorer person.
  • B. The number of films seen per month is a linear function of income level.
  • C. A 20 percent pay increase is more likely to increase film viewing at lower income levels than at higher income levels.
  • D. A 20 percent pay increase is likely to increase film viewing by a constant amount regardless of income level.


Answer : C

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Total 508 questions