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Q211. Which of the following audit procedures is most suitable for verifying that all sales transactions have been recorded?
A. Observation.
B. Tracing.
C. Re-computation.
D. Vouching.
Answer: B
Q212. Which of the following topics must the internal audit staff discuss with management during the exit conference?
1.
Issues identified during the audit.
2.
Evaluation criteria used to select controls for testing.
3.
Staff who were interviewed during the audit.
4.
The reporting process for the draft and final report.
A. 1 and 3 only
B. 1 and 4 only
C. 2 and 3 only
D. 2 and 4 only
Answer: B
Q213. The internal audit activity's primary responsibility in a review or examination of the organization by an external regulatory body is to:
A. Verify that regulatory reviews occur with adequate frequency.
B. Provide follow-up to determine if the regulator's findings are appropriately resolved by management.
C. Prepare documentation for the regulator.
D. Document the responses to the regulator's findings.
Answer: B
Q214. A performance audit engagement typically involves:
A. Review of financial statement information, including the appropriateness of various accounting treatments.
B. Tests of compliance with policies, procedures, laws, and regulations.
C. Appraisal of the environment and comparison against established criteria.
D. Evaluation of organizational and departmental structures, including assessments of process flows.
Answer: C
Q215. In a review of an electronic data interchange application using a third-party service provider, the auditor should:
I. Ensure encryption keys meet International Organization for Standardization (ISO) standards.
II. Determine whether an independent review of the service provider's operation has been conducted.
III. Verify that only public-switched data networks are used by the service provider.
IV.
Verify that the service provider's contracts include necessary clauses, such as the right to audit.
A.
I and II only
B.
I and IV only
C.
II and III only
D.
II and IV only
Answer: D
Q216. During a payroll audit of a large organization, an internal auditor noted that the assistant personnel director is responsible for many aspects of the computerized payroll system, including adding new employees in the system; entering direct-deposit information for employees; approving and
entering all payroll changes; and providing training for system users. After discussions with the director of personnel, the auditor concluded that the director was not comfortable dealing with information technology issues and felt obliged to support all actions taken by the assistant director. The auditor should:
A. Continue to follow the engagement program because the engagement scope and objectives have already been discussed with management.
B. Review the engagement program to ensure testing of direct deposits to employee bank accounts is adequately covered.
C. Recommend to the chief audit executive that a fraud investigation be started.
D. Test a sample of payroll changes to ensure that they were approved by the assistant director before being processed.
Answer: B
Q217. An internal auditor has been assigned to perform a quality audit on a manufacturing plant. Which course of action should the auditor perform first?
A. Compare the planned outputs with the actual outputs.
B. Ascertain the costs of materials purchased.
C. Evaluate the plant's ability to meet production quotas.
D. Review the levels of scrap and rework.
Answer: D
Q218. According to IIA guidance, which of the following are acceptable strategies for an internal audit activity (IAA) to establish or build relationships?
A. Assist executives with their administrative and governance responsibilities, and encourage all IAA members to develop relationships with the organization's executives.
B. Assist executives with their administrative and governance responsibilities, and ensure that all communications with the board are formal audit reports or preset agendas.
C. During an engagement, restrict communications with affected executives to matters pertaining to the engagement; and encourage all IAA members to develop relationships with the organization's executives.
D. During an engagement, restrict communications with affected executives to matters pertaining to the engagement; and ensure that all communications with the board are formal audit reports or preset agendas.
Answer: A
291. During an audit of an ethics program, which of the following procedures are most appropriate to evaluate the effectiveness of the program?
.
Testing whether corrective actions taken on involved parties breaching the ethics program are adequate.
.
Testing whether all employees are mandated through policy to comply with the ethics program.
.
Testing whether all employees are required to confirm in writing their compliance with the ethics program.
.
Testing through surveys employee's level of understanding and commitment to the ethics program.
A.
1 and 2 only
B.
1 and 4 only
C.
2 and 3 only
D.
3 and 4 only
Answer: B
Q219. Which of the following procedures would provide the best evidence of the effectiveness of a credit- granting function?
A. Observe the process.
B. Review the trend in receivables write-offs.
C. Ask the credit manager about the effectiveness of the function.
D. Check for evidence of credit approval on a sample of customer orders.
Answer: B
Q220. An employee in the sales department completes a purchase requisition and forwards it to the purchaser. The purchaser places competitive bids and orders the requested items using approved purchase orders. When the employee receives the ordered items, she forwards the packing slips to the accounts payable department. The invoice for the ordered items is sent directly to the sales department, and an administrative assistant in the sales department forwards the invoices to the accounts payable department for payment. Which of the following audit steps best addresses the risk of fraud in the cash receipts process?
A. Verify that approvals of purchasing documents comply with the authority matrix.
B. Observe whether the purchase orders are sequentially numbered.
C. Examine whether the sales department supervisor approves invoices for payment.
D. Determine whether the accounts payable department reconciles all purchasing documents prior to payment.
Answer: C
Q221. When conducting audit follow-up of a finding related to cash management routines, an internal auditor would expect to find that all of the following changes have occurred except:
A. The steps being taken are resolving the condition disclosed by the finding.
B. Inherent risk has been eliminated as a result of resolution of the condition.
C. Controls have been implemented to deter or detect a recurrence of the finding.
D. Benefits have accrued to the entity as a result of resolving the condition.
Answer: B
Q222. As part of a preliminary survey of the purchasing function, an internal auditor reads the department's policies and procedures manual and concludes that the manual describes the processing steps clearly and contains an appropriate internal control design. The next engagement objective is to evaluate the operating effectiveness of internal controls. Which procedure would fulfill this objective most effectively?
A. Perform a design test.
B. Perform a compliance test.
C. Perform a systems test.
D. Perform an efficiency test.
Answer: B
Q223. Which of the following is a detective control for managing the risk of fraud?
A. Awareness of prior incidents of fraud. B. Contractor non-disclosure agreements. C. Verification of currency exchange rates. D. Receipts for employee expenses.
Answer: C
Q224. During a consulting engagement, an internal auditor identifies new risks which will impact the scope and sufficiency of the engagement audit plan. According to the Standards, the internal auditor should:
A. Discuss the potential impact on the scope with the client.
B. Modify the scope to incorporate the new risks and continue the engagement.
C. End the engagement, as the audit scope is no longer sufficient to meet the audit objective.
D. Continue the engagement but highlight the impacts on the audit scope in the final report.
Answer: A
Q225. During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding to the audit supervisor, noting that the sales manager had additional new contracts under negotiation. According to IIA guidance, which of the following would be the most appropriate next step?
A. The audit supervisor should include the new contracts in the finding for the final audit report.
B. The audit supervisor should communicate the finding to the supervisor of the sales manager through an interim report.
C. The audit supervisor should remind the sales manager of his authority limit for the contracts under negotiation.
D. The auditor should not reference the new contracts, because they are not yet signed and therefore cannot be included in the final report.
Answer: B