Qualified Internal Auditor QIA - Questions + Answers
Posted: Thu Mar 03, 2022 7:41 am
QUESTION 1
The internal auditors of a financial institution are auditing the institution's investing and lending activities. During the last year, the institution has adopted new policies and procedures for monitoring investments and the loan portfolio. The auditors know that the organisation has invested in new types of financial instruments during the year and is heavily involved in the use of financial derivatives to appropriately hedge risks
The audit committee has expressed concern that the financial institution has been taking on higher-risk loans in pursuit of short term profit goals.
Which of the following audit procedures would provide the least amount of information to address this audit concern?
A. Performananalyticalreviewofinterestincomeasapercentageoftheinvestmentportfolioin comparison with a group of peer financial institutions.
B. Takearandomsampleofloansmadeduringtheperiodandcomparetheriskinessoftheloanswith that of a random sample of loans made two years ago.
C. Perform an analytical review that involves developing a chart to compare interest income plotted over the past ten years.
D. Develop a multiple regression time series analysis of income over the past five years, including such factors as interest rate in the economy, size of loan portfolio, and dollar amount of new loans each year.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 2
An operational audit is being performed to evaluate the productivity of telephone sales representatives relative to last year. The organization sells two similar products, one of which is priced 20% higher than the other. Prices did not change during the two years subject to the audit, and the gross profit percentage is the same for both products. The sales representatives are paid a base salary plus a commission.
Which one of the following items represents the best evidence that the organization's sales representatives are more productive this year than last year?
A. Therevenueperrepresentativeishigherthisyearthanlastyear.
B. Thenumberofsalescallsishigherthisyearthanlastyear.
C. The ratio of the number of new customers to the number of prospects contacted is higher this year than last year.
D. Unit sales increased at a higher rate this year than last year.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 3
In planning a system of internal operating controls, the role of the internal auditor is to
A. Designthecontrols.
B. Appraisetheeffectivenessofthecontrols.
C. Establish the policies for controls.
D. Create the procedures for the planning process.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 4
An example of an internal non-financial benchmark is
A. Thelaborrateofcomparablyskilledemployeesatamajorcompetitor'splant.
B. Theaverageactualcostperpoundofaspecificproductatthecompany'smostefficientplantbecomes the benchmark for the company's other plants.
C. The company setting a benchmark of $50,000 for employee training programs at each of the company's plants.
D. The percent of customer orders delivered on time at the company's most efficient plant becomes the benchmark for the company's other plants.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
correctly answered.
QUESTION 5
Auditors realize that at times corrective action is not taken even when agreed to by the appropriate parties. This should lead an internal auditor to
A. Decidetheextentofnecessaryfollow-upwork.
B. Allowmanagementtodecidewhentofollow-up,sinceitismanagement'sultimateresponsibility. C. Decide to conduct follow-up work only if management requests the auditor's assistance.
D. Write a follow-up audit report with all findings and their significance to the operations.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
definite answer.
QUESTION 6
Reporting to senior management and the board is an important part of the auditor's obligation.
Which of the following items is not required to be reported to senior management and/or the board?
A. Subsequenttothecompletionofanaudit,butpriortotheissuanceofanauditreport,theauditseniorin charge of the audit was offered a permanent position in the auditee's department.
B. Anannualreportsummaryofthedepartment'sauditworkscheduleandfinancialbudget.
C. Significant interim changes to the approved audit work schedule and financial budget.
D. Anauditplanwasapprovedbyseniormanagementandtheboard.Subsequenttotheapproval,senior management informed the audit director not to perform an audit of a division because the division's
activities were very sensitive.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 7
Internal auditing is responsible for reporting fraud to senior management or the board when
A. Theincidenceoffraudofamaterialamounthasbeenestablishedtoareasonablecertainty. B. Suspiciousactivitieshavebeenreportedtointernalauditing.
C. Irregular transactions have been identified and are under investigation.
D. The review of all suspected fraud related transactions is complete.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 8
The requirements for staffing level, education and training, and audit research should be included in
A. Theinternalauditingdepartment'scharter.
B. Theinternalauditingdepartment'spoliciesandproceduresmanual. C. The annual plan for the internal auditing department.
D. Job descriptions for the various staff positions.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 9
Management is legally required to prepare a shipping document for all movement of hazardous materials. The document must be filed with bills of lading. Management expects 100% compliance with the procedure.
Which of the following sampling approaches would be most appropriate?
A. Attributessampling. B. Discoverysampling. C. Targeted sampling. D. Variables sampling.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 10
Which of the following investigative tools is most effective when large volumes of evidence need to be
analyzed?
A. Interviews
B. Questionnaires C. Forensic analysis D. Computer
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
appropriate answer.
QUESTION 11
A personnel department is responsible for processing placement agency fees for new hires. A recruiter established some bogus placement agencies and, when interviewing walk-in applicants, the recruiter would list one of the bogus agencies as referring the candidate.
A possible means of detection or deterrence is to
A. Processallpersonnelagencyinvoicesviaapurchaseorderthroughthepurchasingdepartment.
B. Verifynewvendorstofirmslistedinaprofessionalassociationcatalogueand/orverifythevendorname and address through the telephone book.
C. Monitor the closeness of the relationships of recruiters with specific vendors.
D. Require all employees to sign an annual conflict of interest statement.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 12
Internal auditors must exercise due care if they are to meet their responsibilities for fraud detection. Thus, the existence of certain conditions should raise red flags and arouse auditors' professional scepticism concerning possible fraud.
Which of the following is most likely to be considered an indication of possible fraud?
A. Anewmanagementteaminstalledastheresultofatakeover. B. Rapidturnoveroffinancialexecutives.
C. Rapid expansion into new markets.
D. An Internal Revenue Service audit of tax returns.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 13
Which of the following is a particular activity of internal audit function?
A. Specialinvestigations,forinstance,intosuspectedfraud
B. Confirmthatthefinalresult(thesum)iscorrect
C. To evaluate the system of internal control that are mainly concerned with the financial statements and accounting
D. To give an opinion on overall fairness of the financial statements and accounting
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 14
Viba, who is audit senior on the in progress audit of Weave plc, has recently placed her CV with a recruitment agent. She has had no feedback from the agent, with whom she has a meeting on Friday. The agency is currently carrying an advert for financial controller at Weave plc, but the advert does not give the company's name.
This represents:
A. Aself-interestthreat B. Anintimidationthreat C. A management threat D. No threat
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 15
Which of the following is an example of intimidation threat to independence of the auditor?
A. Theauditfirmhasbeeninvolvedinmaintainingtheaccountingrecords,orundertakingvaluationsthat are incorporated in the financial statements
B. Theauditfirmisactingasalegaladvocatefortheclientinlitigation
C. Xenia Taliotis is an influential finance director of Winner Plc
D. The audit firm is working for long time for its client
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 16
Which of the following is not a stage of risk management process?
A. Identification B. Assessment C. Migration
D. Review
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 17
The auditor wants to understand the actual flow of data regarding cash processing. The most convincing evidence would be obtained by
A. Reviewingthesystemsflowchart.
B. Performinga"walk-through"oftheprocessingandobtainingcopiesofalldocumentsused.
C. Reviewing the programming flowchart for evidence of control procedures placed into the computer programs.
D. Interviewing the treasurer.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 18
The internal audit activity evaluates and contributes to the improvement of risk management, control, and governance systems. Which of the following statements is associated with the improvement of governance?
A. Theinternalauditactivityshouldascertaintheextenttowhichoperatingandprogramgoalsand objectives have been established and conform to those of theorganization.
B. Theinternalauditactivityshouldreviewoperationsandprogramstoensureconsistency withorganizationalvalues.
C. The internal audit activity should be free from interference in determining the scope of internal auditing, performing work, and communicating results.
D. The internal audit activity should adopt a process to control and assess the overall effectiveness of the quality program.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 19
Which technique is most appropriate for testing the quality of the pre-audit of payment vouchers described in an internal control questionnaire (ICQ)?
A. Analysis
B. Evaluation C. Verification D. Observation
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 20
Which of the following documents would provide the most persuasive evidence concerning the existence and valuation of a receivable?
A. Acreditapprovaldocumentsupportedbythecustomer'sauditedfinancialstatements. B. Acopyofasalesinvoicetothecustomerintheauditee'srecords.
C. A positive confirmation received directly from the customer.
D. A customer's purchase order in the auditee's records related to the credit sale.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 21
What evidence is appropriate to determine that recorded purchase transactions were valid and at the best price?
A. Purchaserequisitions,journalvoucherentries,andbidquotes. B. Purchaserequisitions,purchaseorders,andbidquotes.
C. Receiving reports, purchase orders, and purchase requisitions. D. Purchase orders, receiving reports, and bid quotes.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
actual answer.
QUESTION 22
Which of the following tests can help the auditor to evaluate the adequacy of the company's allowance for doubtful accounts?
A. Reconcilingtheaccountsreceivablesubsidiaryledgerswiththecontrolaccount. B. Preparinganaginganalysis.
C. Reviewingauthorizationof credit terms.
D. Tracing a sample of credit memos to the accounts receivable subsidiary ledger.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 23
In an audit of the procurement system, which of the following procedures would an auditor perform to determine whether competitive bidding procedures were adequate?
A. Bidsaresolicitedbasedonproperlyapprovedrequests.
II. A sufficient number of vendors were selected to ensure competition. III. Incoming bids are first returned to the buyer for control purposes.
B. IandIII.
C. II and III.
D. I, II, and III.
E. IandII.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 24
During an interview with a data input clerk to discuss a computerized system used to track employee training requirements and compliance, an auditor identifies a potentially significant weakness in the system.
The auditor should
A. Notmentiontheweakness,directlyorindirectly,toavoidmakingtheclerkuncomfortable.
B. Askindirectquestionsthatwillhelpgetmorefactualinformationrelatingtothepotentialweakness. C. Ask the clerk about the weakness and determine immediately if the finding should be reported.
D. Conduct a second interview after determining whether the weakness actually exists.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 25
Working papers serve the following purpose for the internal auditor:
A. Providetheauditeeaplacetomakeresponsestoauditrecommendations. B. Maketheauditreportmorereadablebyprovidingaplacetoappendexhibits. C. Provide the principal evidential support for the internal auditor's report.
D. Provide a place to summarise overall audit recommendations.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 26
Which of the following statements conveys negative information in such a way that a favorable response from the auditee may still be achieved?
A. Yourbookkeeperhasfailedtoreconcilethebankstatementeachmonth.
B. Thebankstatementshavenotbeenreconciledeachmonth.
C. Unfortunately, your bookkeeper has not taken the time to reconcile the bank statement each month.
D. You have apparently failed to inform your book keeper that the bank statements should be reconciled on a timely basis.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 27
When making a presentation to management, the auditor wants to report findings and to stimulate action. These objectives are best accomplished by
A. Deliveringalectureonthefindings.
B. Showingaseriesofslidesoroverheadsthatgraphicallydepictthefindings;limitverbalcommentary. C. Using slides/overheads to support a discussion of major points.
D. Handing out copies of the report, asking the participants to read the report, and asking for questions.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 28
During an audit of sales representatives' travel expenses, it was discovered that 152 of 200 travel advances issued to sales representatives in the past year exceeded the prescribed maximum amount allowed.
Which of the following statements is a justifiable audit opinion?
A. Themajorityoftraveladvancesintheorganizationexceedtheprescribedmaximum. B. Traveladvancesarenotcontrolledinaccordancewithexistingpolicy.
C. The prescribed maximum travel advance is too low.
D. 76% of all travel advances exceed the management prescribed maximum.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 29
Due to the small number of staffs, one remote unit's petty cash custodian also had responsibility for the imprest fund checking account reconciliation. The cashier concealed a diversion of funds by altering the beginning balance on the monthly reconciliations sent to the group office.
A possible audit test to detect this would be to
A. Comparemonthlybalancesandusechangeandtrendanalysis.
B. Requireadditionalmonitoringbyheadquarterswheneverimpropersegregationofdutiesexistsat remote units.
C. Determine if any employees have high personal debt.
D. Determine if any employees are leading expensive lifestyles.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
appropriate answer.
QUESTION 30
One concern of a user of a computer service centre is that one firm's transactions may accidentally be used in the process of updating a second firm's master files. The control procedure that would best provide assurance of the integrity of the master files during updating processes is a check for
A. Completenessofinput,suchasacomputersequencecheck.
B. Correctmasterfiles,suchasaheaderlabel.
C. Input accuracy, such as a check of detail reports.
D. Accuracy of file maintenance, such as review of exception reports.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 31
The primary concern in a program results audit is a determination that
A. FinancialstatementsarepresentedinaccordancewithInternationalFinancialReportingStandards. B. Desiredbenefitsarebeingachieved.
C. The entity has complied with laws and regulations.
D. Resources are managed economically and efficiently.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 32
In order to ensure the proper addition/deletion of authorizations in an operational audit of data access security, an internal auditor would verify that
A. Individualswhoarenotemployeeshavenoaccessprivileges.
B. Revokedaccessprivilegesarecancelledonaweeklycycle.
C. Accessprivilegesareactivatedpromptlyaftertheyareauthorized.
D. A systemsprogramkeeps records of all additions/deletions of access changes.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 33
Which of the following control procedures would provide the greatest assurance that all donations to a non- profit organization are immediately deposited to the organization's account?
A. Usealockboxtoreceivealldonations.
B. Performperiodicinternalauditsoftheorganization'scashreceiptsbytracingdepositstotheoriginal posting in the cash receipts records.
C. Require that all donations be made by cheque.
D. Require issuance of a confirmation receipt to all donors, with the receipt issued by the person who opens and deposits the cash receipts.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 34
A Qualified Internal Auditor directs the audit function for a large city and is planning the audit schedule for the next year. The city has a number of different funds, some that are restricted in use by government grants and some that require compliance reports to the government. One of the programs for which the city has received a grant is job retraining and placement. The grant specifies certain conditions a participant in the program must meet in order to be eligible for the funding.
The auditor must determine the applicable laws and regulations.
Which of the following procedures would be the least effective in learning about the applicable laws and regulations?
A. Makeinquiriesofthecity'schieffinancialofficer,legalcounsel,orgrantadministrators.
B. Reviewprioryearworkingpapersandenquireofofficialsastochanges.
C. Review applicable grant agreements.
D. Discuss the matter with the audit committee and make inquiries as to the nature of the requirements and the audit committee's objectives for the audit.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 35
Data gathered in support of an audit conclusion can be rated on a continuum of reliability. The most reliable form of evidence would be an
A. Internaldocumentobtainedfromtheauditee.
B. Externaldocumentobtaineddirectlyfromanoutsidesource.
C. Internal document subject to rigorous internal review procedures.
D. Internal document that has been circulated through an outside party.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
real answer.
QUESTION 36
The consultative approach to auditing emphasizes
A. Impositionofcorrectivemeasures.
B. Participationwithauditeestoimprovemethods. C. Fraud investigation.
D. Implementation of policies and procedures.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 37
Which of the following is an example of an efficiency measure?
A. Therateofabsenteeism.
B. Thegoalofbecomingaleadingmanufacturer.
C. The number of insurance claims processed per day. D. The rate of customer complaints.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 38
Follow-up activity may be required to ensure that corrective action has taken place for certain findings. The internal audit department's responsibility to perform follow-up activities as required should be defined in the
A. Internalauditingdepartment'swrittencharter.
B. Missionstatementoftheauditcommittee.
C. Engagement memo issued prior to each audit assignment. D. Purpose statement within applicable audit reports.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 39
Which of the following audit committee activities would be of the greatest benefit to the internal auditing department?
A. Reviewandapprovalofauditprograms.
B. Assurancethattheexternalauditorwillrelyontheworkoftheinternalauditingdepartmentwhenever possible.
C. Review and endorsement of all internal audit reports prior to their release.
D. Support for appropriate follow-up of recommendations made by the internal auditing department.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Okay.
QUESTION 40
Why should organizations require auditees to promptly reply and outline the corrective action that has been implemented on reported deficiencies?
A. Toclosetheopenauditissuesassoonaspossible. B. Toeffectsavingsasearlyaspossible.
C. To indicate concurrence with the audit findings.
D. To ensure that the auditor performance is evaluated.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 41
Which of the following activities is not included in determining the audit schedule?
A. Developingauditprograms.
B. Assessingriskfactors.
C. Planning workload requirements. D. Identifying auditable locations.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 42
During an audit, the internal auditor should consider the following factor(s) in determining the extent to which analytical procedures should be used, Except
A. Adequacyofthesystemofinternalcontrol.
B. Significanceoftheareabeingexamined.
C. Precision with which the results of analytical audit procedures can be predicted. D. Preparation of employee questionnaire policy.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 43
How does CSA differ from traditional methods of auditing?
A. Shiftssomeoftheresponsibilitiesawayfromtheauditorstowardsotherssuchasworkteams.
B. Allocatedadditionalresponsibilitiestointernalaudit.
C. Reduces the level of collaboration required between managers and internal auditor.
D. Allowsassessmenttobecarriedoutwithoutanyinternalauditinvolvementwhatsoever,therefore allowing them to focus their attention on other areas of theorganization.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 44
Which of the following is not an activity of internal audit function?
A. Examiningfinancialandoperatinginformation
B. Reviewoftheeconomy,efficiencyandeffectivenessofoperations
C. Review of compliance with laws, regulations and other external requirements D. Confirming that the final result (the sum) is correct
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 45
Which of the following areas are addressed by attribute standards?
A. Independence,objectivity,andnatureofthework
B. Independence,communicationoffindings,andtheresolutionofproblemsaffectingtherisksaccepted by management
C. Independence, objectivity and proficiency
D. Engagement planning, engagement execution, and progress monitoring
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 46
Your assurance firm is auditor of Happy Goods. The audit manager has just become engaged to the managing director's daughter, who he met through a mutual friend. The managing director owns 51% of the shares in Happy Goods. Which of the threat is not there in this case?
A. Intimidationthreat B. Familiaritythreat C. Self-interest threat D. Advocacythreat
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
satisfactory answer.
QUESTION 47
Which of the following is not an argument for principles-based approach to corporate governance?
A. Thesamerulesmightnotbesuitableforeverycompany
B. Therearesomeaspectsofcorporategovernancethatcannotberegulatedeasily C. Companies do not have the choice of ignoring the rules
D. The most suitable corporate governance practices can differ between companies
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 48
The following are potential sources of evidence regarding the effectiveness of the division's total quality management program. Assume that, all comparisons are for similar time periods and duration and current items are compared with similar items before the implementation of the total quality management program. The least persuasive evidence would be a comparison of
A. Employeemoraleoverthetwotimeperiods.
B. Scrapandreworkcostsoverthetwotimeperiods.
C. Customer returns over the two time periods.
D. Manufacturing and distribution costs per unit over the two time periods.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 49
Which of the following is not a component of audit risk?
A. Inherentrisk B. Controlrisk C. Defective risk D. Detection risk
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 50
Accounts payable schedule verification may include the use of analytical evidence. Which of the following is most appropriately described as analytical evidence?
A. Comparingtheitemsontheschedulewiththeaccountspayableledgerorunpaidvoucherfile. B. Comparingthebalanceontheschedulewiththebalancesofprioryears.
C. Comparing confirmations received from selected creditors with the accounts payable ledger. D. Examining vendors' invoices in support of selected items on the schedule.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
good answer.
QUESTION 51
Which of the following types of tests would be the most persuasive if an internal auditor wanted assurance of the existence of inventory stored in a warehouse?
A. Examinationoftheshippingdocumentssupportingrecordedtransferstoandfromthewarehouse. B. Obtainingwrittenconfirmationfrommanagement.
C. Physically observing the inventory in the warehouse.
D. Examination of warehouse receipts contained in the auditee's records.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 52
Which of the following is the best source for an audit team to use to identify common risks faced by a company?
A. Checklistsorreminderlists
B. Flowcharts
C. Questionnaires
D. Research reported in professional journals and text books
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 53
To identify shortages of specific items in an inventory of expensive goods held for retail sale, the most appropriate audit work step is to
A. Applytheretailmethodofinventoryvaluation.
B. Comparephysicalinventorycountstoperpetualrecords.
C. Develop inventory estimates based on the gross profit percentage method. D. Analyzecurrentandpreviousinventoryturnoverrates.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 54
Which of the following audit procedures would be most effective in determining whether vendor invoices are being processed on a timely basis while maximizing the company's use of cash?
A. Determinethelengthofprocessingtimebetweenthereceiptofthevendor'sinvoicetothepayment date for the related disbursement.
B. Interviewtheaccountspayablemanagertodeterminetheproceduresandstandardsforprocessing vendor invoices.
C. Compare the vendor's invoice due date with the payment date as indicated on the cancelled check.
D. Compare the date stamped on the invoice for receipt with the corresponding payment date for the disbursement.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
accurate answer.
QUESTION 55
An internal auditor would trace copies of sales invoices to shipping documents in order to determine that:
A. Customershipmentswerebilled.
B. Salesthatarebilledwerealsoshipped.
C. Shipments to customers were also recorded as receivables. D. The subsidiary accounts receivable ledger was updated.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
QUESTION 56
Each individual work paper should, at a minimum, contain
A. Anexpressionofanauditopinion.
B. Atickmarklegend.
C. A complete flowchart of the system of internal controls for the area being reviewed. D. A descriptive heading.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 57
Which of the following techniques is best for emphasizing a point in a written communication?
A. Placethepointinthemiddleratherthanatthebeginningorendoftheparagraph.
B. Usepassiveratherthanactivevoice.
C. Highlight the point through the use of nonparallel structure.
D. Use a short sentence with one idea rather than a longer sentence with several ideas.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 58
An internal audit director has noticed that staff auditors are presenting more oral reports to supplement written reports.
The best reason for the increased use of oral reports by the auditors is that they
A. Reducetheamountoftestingrequiredtosupportauditfindings.
B. Canbedeliveredinaninformalmannerwithoutpreparation.
C. Can be prepared using a flexible format, thereby increasing overall audit efficiency.
D. Permit auditors to counter arguments and provide additional information that the audience may require.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
accurate answer.
QUESTION 59
An internal auditor found that employees in the maintenance department were not signing their time cards. This situation also existed during the last audit.
The auditor should
A. Includethisfindinginthecurrentauditreport.
B. Askthemanagerofthemaintenancedepartmenttoassumetheresultingrisk.
C. Withhold conclusions about payroll internal control in the maintenance department. D. Instruct the employees to sign their time cards
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 60
Purchases from two new vendors increased dramatically after a new buyer was hired. The buyer was obtaining kickbacks from the two vendors based on sales volume.
A possible means of detection is
A. Periodicvendorsurveysregardingpotentialbuyerconflictofinterestorethicsviolations. B. Thereceiptofaninvoicetoputnewvendorsonthemasterfile.
C. The use of purchase orders for all purchases.
D. The use of change analysis and trend analysis of buyer or vendor activity.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 61
An organization uses a service bureau to process its hourly payroll transactions. The internal auditor is concerned that the hourly payroll for the year has been processed correctly and, in particular, the computation of employee withholding for pension contributions is in accordance with the union contract, which specifies charges each quarter.
Which of the following audit procedures would best accomplish the audit objective?
A. Selectarandomsampleofallhourlypayrolltransactionsforthereportingperiod,re-computepayand withholding items, and compare the result with that obtained from the service bureau.
B. Selectastratifiedsampleofallhourlyandsalariedpayrolltransactionsforanentirereportingperiod, perform the necessary activities, and then compare the result with that obtained from the service bureau.
C. Select a discovery sampling of all payroll transactions for an entire reporting period and then follow up
on any findings.
D. Submit a set of test data to the service bureau during an annual audit and compare the service bureau's processing with the auditor's predetermined computations on the same test data.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 62
The objective of a program results audit requires the auditor to
A. Placeanemphasisonoutputsratherthaninputs.
B. Lookforcostsavingsorwaste.
C. Include only historical data in the audit.
D. Render an opinion on the fairness of financial presentation.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 63
In addition to controls over access, processing, program changes, and other functions, a computerized system needs to establish an audit trail of information.
Which of the following information would generally not be included in an audit trail log designed to summaries unauthorized system access attempts?
A. Alistofauthorizedusers.
B. Thetypeofeventortransactionattempted. C. The terminal used to make the attempt.
D. The data in the program sought.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
fine answer.
QUESTION 64
Audits vary in their degree of objectivity. Of the following, which is likely to be the most objective?
A. Complianceauditofcompany'sovertimepolicy.
B. Operationalauditofthepersonnelfunctionhiringandfiringprocedures. C. Performance audit of the marketing department.
D. Financial control audit over payroll procedures.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 65
The appropriate sampling plan to use to identify at least one irregularity, assuming some number of such irregularities exist in a population, and then to discontinue sampling when one irregularity is observed is
A. Stop-and-gosampling. B. Discoverysampling. C. Variables sampling.
D. Attributes sampling.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 66
Computer fraud is discouraged by
A. Beingwillingtoprosecute.
B. Ostracizingwhistle-blowers.
C. Overlooking inefficiencies in the judicial system. D. Accepting the lack of integrity in the system.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 67
Experience has shown that certain conditions in an organization are symptoms of possible management fraud.
Which of the following conditions would not be considered as an indicator of possible fraud?
A. Managersregularlyassumesubordinates'duties.
B. Managersdealinginmattersoutsidetheirprofitcentre'sscope.
C. Managers not complying with corporate directives and procedures. D. Managers subject to formal performance reviews on a regular basis.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
right answer.
QUESTION 68
In order for internal auditors to be able to recognize potential fraud, they must be aware of the basic characteristics of fraud. Which of the following is not a characteristic of fraud?
A. Intentionaldeception.
B. T aking unfair or dishonest advantage.
C. Perpetration for the benefit or detriment of theorganization.
D. Negligence on the part of executive management.
Correct Answer: D
Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 69
Which of the following documents would provide the best evidence that a purchase transaction has actually occurred?
A. Cancelledchequeissuedinpaymentoftheprocuredgoods.
B. Orderingdepartment'soriginalrequisitionforthegoods.
C. Receiving memorandum documenting the receipt of the goods. D. Supplier's invoice for the procured goods.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
selection of option is correct.:
QUESTION 70
An auditor selected a random sample of 100 items from a population of 2,000 items. The total dollars in the sample were $10,000, and the standard deviation was $10. If the achieved precision based on this sample was plus or minus $4,000, the minimum acceptable value of the population would be
A. $204,000 B. $196,000 C. $199,000 D. $199,800
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 71
During the audit of inventories, an internal auditor specified a precision of 5% instead of the 4% contained in the preliminary audit program.
What would be the impact of the change in precision?
A. Adecreaseinpopulationstandarddeviation. B. Anincreaseinpopulationstandarddeviation. C. A decrease in required sample size
D. An increase in required sample size
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 72
In a variables sampling application, which of the following factors will vary directly with a change in confidence level from 90% to 95%?
A. Standarderrorofthemean.
B. Non-samplingerror.
C. Achieved precision.
D. Point estimate of the arithmetic mean.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 73
An audit team developed a preliminary questionnaire with the following response choices:
A. Probablynotaproblem.
II. Possibly a problem.
III. Probably a problem.
The questionnaire illustrates the use of
B. Trendanalysis.
C. Ratio analysis.
D. Unobtrusive measures or observations.
E. Ratingscales.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
properly answer.
QUESTION 74
The purchasing manager of a manufacturing company was concerned with the rising prices of some direct materials provided by a supplier. The purchasing manager told the supplier to either maintain the current prices or withdraw as a supplier for the company's direct materials. The supplier devised a plan to circumvent the purchasing manager's intent without actually violating the purchasing manager's mandate.
Which one of the following is the probable action taken by the supplier?
A. Thesuppliermaintainedpricesintheshortrunbutlaterreturnedtoapatternofincreasingprices.
B. Thesupplierdecidedtostopprovidingthedirectmaterialstothemanufacturingcompany,sinceholding the line on prices would have a negative impact.
C. The supplier maintained prices but substituted a lower grade of direct materials.
D. The supplier worked through the president of the manufacturing company to force the purchasing manager to cancel the mandate.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 75
To test compliance with a policy regarding sales returns recorded during the most recent year, an auditor systematically selected 5% of the actual returns recorded in March and April. Returns during these two busiest months of the year represented about 25% of total annual returns. Error projections from this sample have limited usefulness because
A. Thesmallsizeofthesamplerelativetothepopulationmakessamplingriskunacceptable. B. Thefailuretostratifythepopulationaccordingtosalesvolumeresultsinbias.
C. The systematic selection of returns during the two months is not sufficiently random.
D. The error rates during the two busiest months may not be representative of the whole year.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 76
A company with 14,344 customers determines that the mean and median accounts receivable balances for the year are $15,412 and $10,382, respectively.
From this information, the auditor can conclude that the distribution of the accounts receivable balances is continuous and
A. Negativelyskewed.
B. Positivelyskewed.
C. Symmetricallyskewed.
D. Evenly distributed between the mean and median.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
finely answered.
QUESTION 77
An audit of accounts payable was made to determine if the error rate was within the stated policy of 0.5%. One hundred of the 10,000 accounts payable transactions were randomly selected using a 95% confidence level. No errors were found.
With 95% certainty, one can conclude that the sample results
A. Indicateanothersampleisneeded.
B. Provetherearenoerrorsinaccountspayable. C. Indicate the null hypothesis is false.
D. Fail to prove the error rate is above 0.5%.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 78
An audit team has been assigned to review `the customer satisfaction measurement system' that the industrial products division implemented two years ago. This system consists of the division's customer service office conducting an annual mail survey. A survey is sent to 100 purchasing departments randomly selected from all customers who made purchases in the prior 12 months. The survey is three pages long and its 30 questions use a mixture of response modes (e.g., some questions are open-ended, some multiple choice, and others use a response scale). The customer service office mails the survey in September and tabulates the results for questionnaires returned by October 15. Only one mail is sent. If the customer does not return the questionnaire, no follow-up is conducted. When the survey was last conducted, 45 of the questionnaires were not returned.
Which of the following is not an advantage of face-to-face interviews over mail surveys?
A. Theresponserateistypicallyhigher.
B. Interviewerscanincreasearespondent'scomprehensionofquestions. C. Survey designers can use a wider variety of types of questions.
D. They are less expensive since mailing costs are avoided.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 79
An internal auditor plans to use an analytical review to verify the correctness of various operating expenses in a division.
The use of an analytical review as a verification technique would not be a preferred approach if
A. Theauditornotesstrongindicatorsofaspecificfraudinvolvingthisaccount.
B. Thecompanyhasrelativelystableoperationsthathavenotchangedmuchoverthepastyear.
C. The auditor would like to identify large, unusual, or nonrecurring transactions during the year.
D. The operating expenses vary in relation to other operating expenses, but not in relation to revenue.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 80
The control self-assessment (CSA) is a
A. Directiveauditingtool. B. Preventiveauditingtool. C. Detective auditing tool. D. Corrective auditing tool.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
The internal auditors of a financial institution are auditing the institution's investing and lending activities. During the last year, the institution has adopted new policies and procedures for monitoring investments and the loan portfolio. The auditors know that the organisation has invested in new types of financial instruments during the year and is heavily involved in the use of financial derivatives to appropriately hedge risks
The audit committee has expressed concern that the financial institution has been taking on higher-risk loans in pursuit of short term profit goals.
Which of the following audit procedures would provide the least amount of information to address this audit concern?
A. Performananalyticalreviewofinterestincomeasapercentageoftheinvestmentportfolioin comparison with a group of peer financial institutions.
B. Takearandomsampleofloansmadeduringtheperiodandcomparetheriskinessoftheloanswith that of a random sample of loans made two years ago.
C. Perform an analytical review that involves developing a chart to compare interest income plotted over the past ten years.
D. Develop a multiple regression time series analysis of income over the past five years, including such factors as interest rate in the economy, size of loan portfolio, and dollar amount of new loans each year.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 2
An operational audit is being performed to evaluate the productivity of telephone sales representatives relative to last year. The organization sells two similar products, one of which is priced 20% higher than the other. Prices did not change during the two years subject to the audit, and the gross profit percentage is the same for both products. The sales representatives are paid a base salary plus a commission.
Which one of the following items represents the best evidence that the organization's sales representatives are more productive this year than last year?
A. Therevenueperrepresentativeishigherthisyearthanlastyear.
B. Thenumberofsalescallsishigherthisyearthanlastyear.
C. The ratio of the number of new customers to the number of prospects contacted is higher this year than last year.
D. Unit sales increased at a higher rate this year than last year.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 3
In planning a system of internal operating controls, the role of the internal auditor is to
A. Designthecontrols.
B. Appraisetheeffectivenessofthecontrols.
C. Establish the policies for controls.
D. Create the procedures for the planning process.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 4
An example of an internal non-financial benchmark is
A. Thelaborrateofcomparablyskilledemployeesatamajorcompetitor'splant.
B. Theaverageactualcostperpoundofaspecificproductatthecompany'smostefficientplantbecomes the benchmark for the company's other plants.
C. The company setting a benchmark of $50,000 for employee training programs at each of the company's plants.
D. The percent of customer orders delivered on time at the company's most efficient plant becomes the benchmark for the company's other plants.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
correctly answered.
QUESTION 5
Auditors realize that at times corrective action is not taken even when agreed to by the appropriate parties. This should lead an internal auditor to
A. Decidetheextentofnecessaryfollow-upwork.
B. Allowmanagementtodecidewhentofollow-up,sinceitismanagement'sultimateresponsibility. C. Decide to conduct follow-up work only if management requests the auditor's assistance.
D. Write a follow-up audit report with all findings and their significance to the operations.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
definite answer.
QUESTION 6
Reporting to senior management and the board is an important part of the auditor's obligation.
Which of the following items is not required to be reported to senior management and/or the board?
A. Subsequenttothecompletionofanaudit,butpriortotheissuanceofanauditreport,theauditseniorin charge of the audit was offered a permanent position in the auditee's department.
B. Anannualreportsummaryofthedepartment'sauditworkscheduleandfinancialbudget.
C. Significant interim changes to the approved audit work schedule and financial budget.
D. Anauditplanwasapprovedbyseniormanagementandtheboard.Subsequenttotheapproval,senior management informed the audit director not to perform an audit of a division because the division's
activities were very sensitive.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 7
Internal auditing is responsible for reporting fraud to senior management or the board when
A. Theincidenceoffraudofamaterialamounthasbeenestablishedtoareasonablecertainty. B. Suspiciousactivitieshavebeenreportedtointernalauditing.
C. Irregular transactions have been identified and are under investigation.
D. The review of all suspected fraud related transactions is complete.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 8
The requirements for staffing level, education and training, and audit research should be included in
A. Theinternalauditingdepartment'scharter.
B. Theinternalauditingdepartment'spoliciesandproceduresmanual. C. The annual plan for the internal auditing department.
D. Job descriptions for the various staff positions.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 9
Management is legally required to prepare a shipping document for all movement of hazardous materials. The document must be filed with bills of lading. Management expects 100% compliance with the procedure.
Which of the following sampling approaches would be most appropriate?
A. Attributessampling. B. Discoverysampling. C. Targeted sampling. D. Variables sampling.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 10
Which of the following investigative tools is most effective when large volumes of evidence need to be
analyzed?
A. Interviews
B. Questionnaires C. Forensic analysis D. Computer
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
appropriate answer.
QUESTION 11
A personnel department is responsible for processing placement agency fees for new hires. A recruiter established some bogus placement agencies and, when interviewing walk-in applicants, the recruiter would list one of the bogus agencies as referring the candidate.
A possible means of detection or deterrence is to
A. Processallpersonnelagencyinvoicesviaapurchaseorderthroughthepurchasingdepartment.
B. Verifynewvendorstofirmslistedinaprofessionalassociationcatalogueand/orverifythevendorname and address through the telephone book.
C. Monitor the closeness of the relationships of recruiters with specific vendors.
D. Require all employees to sign an annual conflict of interest statement.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 12
Internal auditors must exercise due care if they are to meet their responsibilities for fraud detection. Thus, the existence of certain conditions should raise red flags and arouse auditors' professional scepticism concerning possible fraud.
Which of the following is most likely to be considered an indication of possible fraud?
A. Anewmanagementteaminstalledastheresultofatakeover. B. Rapidturnoveroffinancialexecutives.
C. Rapid expansion into new markets.
D. An Internal Revenue Service audit of tax returns.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 13
Which of the following is a particular activity of internal audit function?
A. Specialinvestigations,forinstance,intosuspectedfraud
B. Confirmthatthefinalresult(thesum)iscorrect
C. To evaluate the system of internal control that are mainly concerned with the financial statements and accounting
D. To give an opinion on overall fairness of the financial statements and accounting
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 14
Viba, who is audit senior on the in progress audit of Weave plc, has recently placed her CV with a recruitment agent. She has had no feedback from the agent, with whom she has a meeting on Friday. The agency is currently carrying an advert for financial controller at Weave plc, but the advert does not give the company's name.
This represents:
A. Aself-interestthreat B. Anintimidationthreat C. A management threat D. No threat
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 15
Which of the following is an example of intimidation threat to independence of the auditor?
A. Theauditfirmhasbeeninvolvedinmaintainingtheaccountingrecords,orundertakingvaluationsthat are incorporated in the financial statements
B. Theauditfirmisactingasalegaladvocatefortheclientinlitigation
C. Xenia Taliotis is an influential finance director of Winner Plc
D. The audit firm is working for long time for its client
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 16
Which of the following is not a stage of risk management process?
A. Identification B. Assessment C. Migration
D. Review
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 17
The auditor wants to understand the actual flow of data regarding cash processing. The most convincing evidence would be obtained by
A. Reviewingthesystemsflowchart.
B. Performinga"walk-through"oftheprocessingandobtainingcopiesofalldocumentsused.
C. Reviewing the programming flowchart for evidence of control procedures placed into the computer programs.
D. Interviewing the treasurer.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 18
The internal audit activity evaluates and contributes to the improvement of risk management, control, and governance systems. Which of the following statements is associated with the improvement of governance?
A. Theinternalauditactivityshouldascertaintheextenttowhichoperatingandprogramgoalsand objectives have been established and conform to those of theorganization.
B. Theinternalauditactivityshouldreviewoperationsandprogramstoensureconsistency withorganizationalvalues.
C. The internal audit activity should be free from interference in determining the scope of internal auditing, performing work, and communicating results.
D. The internal audit activity should adopt a process to control and assess the overall effectiveness of the quality program.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 19
Which technique is most appropriate for testing the quality of the pre-audit of payment vouchers described in an internal control questionnaire (ICQ)?
A. Analysis
B. Evaluation C. Verification D. Observation
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 20
Which of the following documents would provide the most persuasive evidence concerning the existence and valuation of a receivable?
A. Acreditapprovaldocumentsupportedbythecustomer'sauditedfinancialstatements. B. Acopyofasalesinvoicetothecustomerintheauditee'srecords.
C. A positive confirmation received directly from the customer.
D. A customer's purchase order in the auditee's records related to the credit sale.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 21
What evidence is appropriate to determine that recorded purchase transactions were valid and at the best price?
A. Purchaserequisitions,journalvoucherentries,andbidquotes. B. Purchaserequisitions,purchaseorders,andbidquotes.
C. Receiving reports, purchase orders, and purchase requisitions. D. Purchase orders, receiving reports, and bid quotes.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
actual answer.
QUESTION 22
Which of the following tests can help the auditor to evaluate the adequacy of the company's allowance for doubtful accounts?
A. Reconcilingtheaccountsreceivablesubsidiaryledgerswiththecontrolaccount. B. Preparinganaginganalysis.
C. Reviewingauthorizationof credit terms.
D. Tracing a sample of credit memos to the accounts receivable subsidiary ledger.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 23
In an audit of the procurement system, which of the following procedures would an auditor perform to determine whether competitive bidding procedures were adequate?
A. Bidsaresolicitedbasedonproperlyapprovedrequests.
II. A sufficient number of vendors were selected to ensure competition. III. Incoming bids are first returned to the buyer for control purposes.
B. IandIII.
C. II and III.
D. I, II, and III.
E. IandII.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 24
During an interview with a data input clerk to discuss a computerized system used to track employee training requirements and compliance, an auditor identifies a potentially significant weakness in the system.
The auditor should
A. Notmentiontheweakness,directlyorindirectly,toavoidmakingtheclerkuncomfortable.
B. Askindirectquestionsthatwillhelpgetmorefactualinformationrelatingtothepotentialweakness. C. Ask the clerk about the weakness and determine immediately if the finding should be reported.
D. Conduct a second interview after determining whether the weakness actually exists.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 25
Working papers serve the following purpose for the internal auditor:
A. Providetheauditeeaplacetomakeresponsestoauditrecommendations. B. Maketheauditreportmorereadablebyprovidingaplacetoappendexhibits. C. Provide the principal evidential support for the internal auditor's report.
D. Provide a place to summarise overall audit recommendations.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 26
Which of the following statements conveys negative information in such a way that a favorable response from the auditee may still be achieved?
A. Yourbookkeeperhasfailedtoreconcilethebankstatementeachmonth.
B. Thebankstatementshavenotbeenreconciledeachmonth.
C. Unfortunately, your bookkeeper has not taken the time to reconcile the bank statement each month.
D. You have apparently failed to inform your book keeper that the bank statements should be reconciled on a timely basis.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 27
When making a presentation to management, the auditor wants to report findings and to stimulate action. These objectives are best accomplished by
A. Deliveringalectureonthefindings.
B. Showingaseriesofslidesoroverheadsthatgraphicallydepictthefindings;limitverbalcommentary. C. Using slides/overheads to support a discussion of major points.
D. Handing out copies of the report, asking the participants to read the report, and asking for questions.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 28
During an audit of sales representatives' travel expenses, it was discovered that 152 of 200 travel advances issued to sales representatives in the past year exceeded the prescribed maximum amount allowed.
Which of the following statements is a justifiable audit opinion?
A. Themajorityoftraveladvancesintheorganizationexceedtheprescribedmaximum. B. Traveladvancesarenotcontrolledinaccordancewithexistingpolicy.
C. The prescribed maximum travel advance is too low.
D. 76% of all travel advances exceed the management prescribed maximum.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 29
Due to the small number of staffs, one remote unit's petty cash custodian also had responsibility for the imprest fund checking account reconciliation. The cashier concealed a diversion of funds by altering the beginning balance on the monthly reconciliations sent to the group office.
A possible audit test to detect this would be to
A. Comparemonthlybalancesandusechangeandtrendanalysis.
B. Requireadditionalmonitoringbyheadquarterswheneverimpropersegregationofdutiesexistsat remote units.
C. Determine if any employees have high personal debt.
D. Determine if any employees are leading expensive lifestyles.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
appropriate answer.
QUESTION 30
One concern of a user of a computer service centre is that one firm's transactions may accidentally be used in the process of updating a second firm's master files. The control procedure that would best provide assurance of the integrity of the master files during updating processes is a check for
A. Completenessofinput,suchasacomputersequencecheck.
B. Correctmasterfiles,suchasaheaderlabel.
C. Input accuracy, such as a check of detail reports.
D. Accuracy of file maintenance, such as review of exception reports.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 31
The primary concern in a program results audit is a determination that
A. FinancialstatementsarepresentedinaccordancewithInternationalFinancialReportingStandards. B. Desiredbenefitsarebeingachieved.
C. The entity has complied with laws and regulations.
D. Resources are managed economically and efficiently.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 32
In order to ensure the proper addition/deletion of authorizations in an operational audit of data access security, an internal auditor would verify that
A. Individualswhoarenotemployeeshavenoaccessprivileges.
B. Revokedaccessprivilegesarecancelledonaweeklycycle.
C. Accessprivilegesareactivatedpromptlyaftertheyareauthorized.
D. A systemsprogramkeeps records of all additions/deletions of access changes.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 33
Which of the following control procedures would provide the greatest assurance that all donations to a non- profit organization are immediately deposited to the organization's account?
A. Usealockboxtoreceivealldonations.
B. Performperiodicinternalauditsoftheorganization'scashreceiptsbytracingdepositstotheoriginal posting in the cash receipts records.
C. Require that all donations be made by cheque.
D. Require issuance of a confirmation receipt to all donors, with the receipt issued by the person who opens and deposits the cash receipts.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 34
A Qualified Internal Auditor directs the audit function for a large city and is planning the audit schedule for the next year. The city has a number of different funds, some that are restricted in use by government grants and some that require compliance reports to the government. One of the programs for which the city has received a grant is job retraining and placement. The grant specifies certain conditions a participant in the program must meet in order to be eligible for the funding.
The auditor must determine the applicable laws and regulations.
Which of the following procedures would be the least effective in learning about the applicable laws and regulations?
A. Makeinquiriesofthecity'schieffinancialofficer,legalcounsel,orgrantadministrators.
B. Reviewprioryearworkingpapersandenquireofofficialsastochanges.
C. Review applicable grant agreements.
D. Discuss the matter with the audit committee and make inquiries as to the nature of the requirements and the audit committee's objectives for the audit.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 35
Data gathered in support of an audit conclusion can be rated on a continuum of reliability. The most reliable form of evidence would be an
A. Internaldocumentobtainedfromtheauditee.
B. Externaldocumentobtaineddirectlyfromanoutsidesource.
C. Internal document subject to rigorous internal review procedures.
D. Internal document that has been circulated through an outside party.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
real answer.
QUESTION 36
The consultative approach to auditing emphasizes
A. Impositionofcorrectivemeasures.
B. Participationwithauditeestoimprovemethods. C. Fraud investigation.
D. Implementation of policies and procedures.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 37
Which of the following is an example of an efficiency measure?
A. Therateofabsenteeism.
B. Thegoalofbecomingaleadingmanufacturer.
C. The number of insurance claims processed per day. D. The rate of customer complaints.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 38
Follow-up activity may be required to ensure that corrective action has taken place for certain findings. The internal audit department's responsibility to perform follow-up activities as required should be defined in the
A. Internalauditingdepartment'swrittencharter.
B. Missionstatementoftheauditcommittee.
C. Engagement memo issued prior to each audit assignment. D. Purpose statement within applicable audit reports.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 39
Which of the following audit committee activities would be of the greatest benefit to the internal auditing department?
A. Reviewandapprovalofauditprograms.
B. Assurancethattheexternalauditorwillrelyontheworkoftheinternalauditingdepartmentwhenever possible.
C. Review and endorsement of all internal audit reports prior to their release.
D. Support for appropriate follow-up of recommendations made by the internal auditing department.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Okay.
QUESTION 40
Why should organizations require auditees to promptly reply and outline the corrective action that has been implemented on reported deficiencies?
A. Toclosetheopenauditissuesassoonaspossible. B. Toeffectsavingsasearlyaspossible.
C. To indicate concurrence with the audit findings.
D. To ensure that the auditor performance is evaluated.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 41
Which of the following activities is not included in determining the audit schedule?
A. Developingauditprograms.
B. Assessingriskfactors.
C. Planning workload requirements. D. Identifying auditable locations.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 42
During an audit, the internal auditor should consider the following factor(s) in determining the extent to which analytical procedures should be used, Except
A. Adequacyofthesystemofinternalcontrol.
B. Significanceoftheareabeingexamined.
C. Precision with which the results of analytical audit procedures can be predicted. D. Preparation of employee questionnaire policy.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 43
How does CSA differ from traditional methods of auditing?
A. Shiftssomeoftheresponsibilitiesawayfromtheauditorstowardsotherssuchasworkteams.
B. Allocatedadditionalresponsibilitiestointernalaudit.
C. Reduces the level of collaboration required between managers and internal auditor.
D. Allowsassessmenttobecarriedoutwithoutanyinternalauditinvolvementwhatsoever,therefore allowing them to focus their attention on other areas of theorganization.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 44
Which of the following is not an activity of internal audit function?
A. Examiningfinancialandoperatinginformation
B. Reviewoftheeconomy,efficiencyandeffectivenessofoperations
C. Review of compliance with laws, regulations and other external requirements D. Confirming that the final result (the sum) is correct
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 45
Which of the following areas are addressed by attribute standards?
A. Independence,objectivity,andnatureofthework
B. Independence,communicationoffindings,andtheresolutionofproblemsaffectingtherisksaccepted by management
C. Independence, objectivity and proficiency
D. Engagement planning, engagement execution, and progress monitoring
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 46
Your assurance firm is auditor of Happy Goods. The audit manager has just become engaged to the managing director's daughter, who he met through a mutual friend. The managing director owns 51% of the shares in Happy Goods. Which of the threat is not there in this case?
A. Intimidationthreat B. Familiaritythreat C. Self-interest threat D. Advocacythreat
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
satisfactory answer.
QUESTION 47
Which of the following is not an argument for principles-based approach to corporate governance?
A. Thesamerulesmightnotbesuitableforeverycompany
B. Therearesomeaspectsofcorporategovernancethatcannotberegulatedeasily C. Companies do not have the choice of ignoring the rules
D. The most suitable corporate governance practices can differ between companies
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 48
The following are potential sources of evidence regarding the effectiveness of the division's total quality management program. Assume that, all comparisons are for similar time periods and duration and current items are compared with similar items before the implementation of the total quality management program. The least persuasive evidence would be a comparison of
A. Employeemoraleoverthetwotimeperiods.
B. Scrapandreworkcostsoverthetwotimeperiods.
C. Customer returns over the two time periods.
D. Manufacturing and distribution costs per unit over the two time periods.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 49
Which of the following is not a component of audit risk?
A. Inherentrisk B. Controlrisk C. Defective risk D. Detection risk
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 50
Accounts payable schedule verification may include the use of analytical evidence. Which of the following is most appropriately described as analytical evidence?
A. Comparingtheitemsontheschedulewiththeaccountspayableledgerorunpaidvoucherfile. B. Comparingthebalanceontheschedulewiththebalancesofprioryears.
C. Comparing confirmations received from selected creditors with the accounts payable ledger. D. Examining vendors' invoices in support of selected items on the schedule.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
good answer.
QUESTION 51
Which of the following types of tests would be the most persuasive if an internal auditor wanted assurance of the existence of inventory stored in a warehouse?
A. Examinationoftheshippingdocumentssupportingrecordedtransferstoandfromthewarehouse. B. Obtainingwrittenconfirmationfrommanagement.
C. Physically observing the inventory in the warehouse.
D. Examination of warehouse receipts contained in the auditee's records.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 52
Which of the following is the best source for an audit team to use to identify common risks faced by a company?
A. Checklistsorreminderlists
B. Flowcharts
C. Questionnaires
D. Research reported in professional journals and text books
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 53
To identify shortages of specific items in an inventory of expensive goods held for retail sale, the most appropriate audit work step is to
A. Applytheretailmethodofinventoryvaluation.
B. Comparephysicalinventorycountstoperpetualrecords.
C. Develop inventory estimates based on the gross profit percentage method. D. Analyzecurrentandpreviousinventoryturnoverrates.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 54
Which of the following audit procedures would be most effective in determining whether vendor invoices are being processed on a timely basis while maximizing the company's use of cash?
A. Determinethelengthofprocessingtimebetweenthereceiptofthevendor'sinvoicetothepayment date for the related disbursement.
B. Interviewtheaccountspayablemanagertodeterminetheproceduresandstandardsforprocessing vendor invoices.
C. Compare the vendor's invoice due date with the payment date as indicated on the cancelled check.
D. Compare the date stamped on the invoice for receipt with the corresponding payment date for the disbursement.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
accurate answer.
QUESTION 55
An internal auditor would trace copies of sales invoices to shipping documents in order to determine that:
A. Customershipmentswerebilled.
B. Salesthatarebilledwerealsoshipped.
C. Shipments to customers were also recorded as receivables. D. The subsidiary accounts receivable ledger was updated.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
QUESTION 56
Each individual work paper should, at a minimum, contain
A. Anexpressionofanauditopinion.
B. Atickmarklegend.
C. A complete flowchart of the system of internal controls for the area being reviewed. D. A descriptive heading.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 57
Which of the following techniques is best for emphasizing a point in a written communication?
A. Placethepointinthemiddleratherthanatthebeginningorendoftheparagraph.
B. Usepassiveratherthanactivevoice.
C. Highlight the point through the use of nonparallel structure.
D. Use a short sentence with one idea rather than a longer sentence with several ideas.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 58
An internal audit director has noticed that staff auditors are presenting more oral reports to supplement written reports.
The best reason for the increased use of oral reports by the auditors is that they
A. Reducetheamountoftestingrequiredtosupportauditfindings.
B. Canbedeliveredinaninformalmannerwithoutpreparation.
C. Can be prepared using a flexible format, thereby increasing overall audit efficiency.
D. Permit auditors to counter arguments and provide additional information that the audience may require.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
accurate answer.
QUESTION 59
An internal auditor found that employees in the maintenance department were not signing their time cards. This situation also existed during the last audit.
The auditor should
A. Includethisfindinginthecurrentauditreport.
B. Askthemanagerofthemaintenancedepartmenttoassumetheresultingrisk.
C. Withhold conclusions about payroll internal control in the maintenance department. D. Instruct the employees to sign their time cards
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
selection of option is correct.
QUESTION 60
Purchases from two new vendors increased dramatically after a new buyer was hired. The buyer was obtaining kickbacks from the two vendors based on sales volume.
A possible means of detection is
A. Periodicvendorsurveysregardingpotentialbuyerconflictofinterestorethicsviolations. B. Thereceiptofaninvoicetoputnewvendorsonthemasterfile.
C. The use of purchase orders for all purchases.
D. The use of change analysis and trend analysis of buyer or vendor activity.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 61
An organization uses a service bureau to process its hourly payroll transactions. The internal auditor is concerned that the hourly payroll for the year has been processed correctly and, in particular, the computation of employee withholding for pension contributions is in accordance with the union contract, which specifies charges each quarter.
Which of the following audit procedures would best accomplish the audit objective?
A. Selectarandomsampleofallhourlypayrolltransactionsforthereportingperiod,re-computepayand withholding items, and compare the result with that obtained from the service bureau.
B. Selectastratifiedsampleofallhourlyandsalariedpayrolltransactionsforanentirereportingperiod, perform the necessary activities, and then compare the result with that obtained from the service bureau.
C. Select a discovery sampling of all payroll transactions for an entire reporting period and then follow up
on any findings.
D. Submit a set of test data to the service bureau during an annual audit and compare the service bureau's processing with the auditor's predetermined computations on the same test data.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 62
The objective of a program results audit requires the auditor to
A. Placeanemphasisonoutputsratherthaninputs.
B. Lookforcostsavingsorwaste.
C. Include only historical data in the audit.
D. Render an opinion on the fairness of financial presentation.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 63
In addition to controls over access, processing, program changes, and other functions, a computerized system needs to establish an audit trail of information.
Which of the following information would generally not be included in an audit trail log designed to summaries unauthorized system access attempts?
A. Alistofauthorizedusers.
B. Thetypeofeventortransactionattempted. C. The terminal used to make the attempt.
D. The data in the program sought.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
fine answer.
QUESTION 64
Audits vary in their degree of objectivity. Of the following, which is likely to be the most objective?
A. Complianceauditofcompany'sovertimepolicy.
B. Operationalauditofthepersonnelfunctionhiringandfiringprocedures. C. Performance audit of the marketing department.
D. Financial control audit over payroll procedures.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 65
The appropriate sampling plan to use to identify at least one irregularity, assuming some number of such irregularities exist in a population, and then to discontinue sampling when one irregularity is observed is
A. Stop-and-gosampling. B. Discoverysampling. C. Variables sampling.
D. Attributes sampling.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 66
Computer fraud is discouraged by
A. Beingwillingtoprosecute.
B. Ostracizingwhistle-blowers.
C. Overlooking inefficiencies in the judicial system. D. Accepting the lack of integrity in the system.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 67
Experience has shown that certain conditions in an organization are symptoms of possible management fraud.
Which of the following conditions would not be considered as an indicator of possible fraud?
A. Managersregularlyassumesubordinates'duties.
B. Managersdealinginmattersoutsidetheirprofitcentre'sscope.
C. Managers not complying with corporate directives and procedures. D. Managers subject to formal performance reviews on a regular basis.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
right answer.
QUESTION 68
In order for internal auditors to be able to recognize potential fraud, they must be aware of the basic characteristics of fraud. Which of the following is not a characteristic of fraud?
A. Intentionaldeception.
B. T aking unfair or dishonest advantage.
C. Perpetration for the benefit or detriment of theorganization.
D. Negligence on the part of executive management.
Correct Answer: D
Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 69
Which of the following documents would provide the best evidence that a purchase transaction has actually occurred?
A. Cancelledchequeissuedinpaymentoftheprocuredgoods.
B. Orderingdepartment'soriginalrequisitionforthegoods.
C. Receiving memorandum documenting the receipt of the goods. D. Supplier's invoice for the procured goods.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
selection of option is correct.:
QUESTION 70
An auditor selected a random sample of 100 items from a population of 2,000 items. The total dollars in the sample were $10,000, and the standard deviation was $10. If the achieved precision based on this sample was plus or minus $4,000, the minimum acceptable value of the population would be
A. $204,000 B. $196,000 C. $199,000 D. $199,800
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 71
During the audit of inventories, an internal auditor specified a precision of 5% instead of the 4% contained in the preliminary audit program.
What would be the impact of the change in precision?
A. Adecreaseinpopulationstandarddeviation. B. Anincreaseinpopulationstandarddeviation. C. A decrease in required sample size
D. An increase in required sample size
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 72
In a variables sampling application, which of the following factors will vary directly with a change in confidence level from 90% to 95%?
A. Standarderrorofthemean.
B. Non-samplingerror.
C. Achieved precision.
D. Point estimate of the arithmetic mean.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 73
An audit team developed a preliminary questionnaire with the following response choices:
A. Probablynotaproblem.
II. Possibly a problem.
III. Probably a problem.
The questionnaire illustrates the use of
B. Trendanalysis.
C. Ratio analysis.
D. Unobtrusive measures or observations.
E. Ratingscales.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
properly answer.
QUESTION 74
The purchasing manager of a manufacturing company was concerned with the rising prices of some direct materials provided by a supplier. The purchasing manager told the supplier to either maintain the current prices or withdraw as a supplier for the company's direct materials. The supplier devised a plan to circumvent the purchasing manager's intent without actually violating the purchasing manager's mandate.
Which one of the following is the probable action taken by the supplier?
A. Thesuppliermaintainedpricesintheshortrunbutlaterreturnedtoapatternofincreasingprices.
B. Thesupplierdecidedtostopprovidingthedirectmaterialstothemanufacturingcompany,sinceholding the line on prices would have a negative impact.
C. The supplier maintained prices but substituted a lower grade of direct materials.
D. The supplier worked through the president of the manufacturing company to force the purchasing manager to cancel the mandate.
Correct Answer: C Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 75
To test compliance with a policy regarding sales returns recorded during the most recent year, an auditor systematically selected 5% of the actual returns recorded in March and April. Returns during these two busiest months of the year represented about 25% of total annual returns. Error projections from this sample have limited usefulness because
A. Thesmallsizeofthesamplerelativetothepopulationmakessamplingriskunacceptable. B. Thefailuretostratifythepopulationaccordingtosalesvolumeresultsinbias.
C. The systematic selection of returns during the two months is not sufficiently random.
D. The error rates during the two busiest months may not be representative of the whole year.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 76
A company with 14,344 customers determines that the mean and median accounts receivable balances for the year are $15,412 and $10,382, respectively.
From this information, the auditor can conclude that the distribution of the accounts receivable balances is continuous and
A. Negativelyskewed.
B. Positivelyskewed.
C. Symmetricallyskewed.
D. Evenly distributed between the mean and median.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
finely answered.
QUESTION 77
An audit of accounts payable was made to determine if the error rate was within the stated policy of 0.5%. One hundred of the 10,000 accounts payable transactions were randomly selected using a 95% confidence level. No errors were found.
With 95% certainty, one can conclude that the sample results
A. Indicateanothersampleisneeded.
B. Provetherearenoerrorsinaccountspayable. C. Indicate the null hypothesis is false.
D. Fail to prove the error rate is above 0.5%.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 78
An audit team has been assigned to review `the customer satisfaction measurement system' that the industrial products division implemented two years ago. This system consists of the division's customer service office conducting an annual mail survey. A survey is sent to 100 purchasing departments randomly selected from all customers who made purchases in the prior 12 months. The survey is three pages long and its 30 questions use a mixture of response modes (e.g., some questions are open-ended, some multiple choice, and others use a response scale). The customer service office mails the survey in September and tabulates the results for questionnaires returned by October 15. Only one mail is sent. If the customer does not return the questionnaire, no follow-up is conducted. When the survey was last conducted, 45 of the questionnaires were not returned.
Which of the following is not an advantage of face-to-face interviews over mail surveys?
A. Theresponserateistypicallyhigher.
B. Interviewerscanincreasearespondent'scomprehensionofquestions. C. Survey designers can use a wider variety of types of questions.
D. They are less expensive since mailing costs are avoided.
Correct Answer: D Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 79
An internal auditor plans to use an analytical review to verify the correctness of various operating expenses in a division.
The use of an analytical review as a verification technique would not be a preferred approach if
A. Theauditornotesstrongindicatorsofaspecificfraudinvolvingthisaccount.
B. Thecompanyhasrelativelystableoperationsthathavenotchangedmuchoverthepastyear.
C. The auditor would like to identify large, unusual, or nonrecurring transactions during the year.
D. The operating expenses vary in relation to other operating expenses, but not in relation to revenue.
Correct Answer: A Section: (none) Explanation
Explanation/Reference:
Explanation:
QUESTION 80
The control self-assessment (CSA) is a
A. Directiveauditingtool. B. Preventiveauditingtool. C. Detective auditing tool. D. Corrective auditing tool.
Correct Answer: B Section: (none) Explanation
Explanation/Reference:
Explanation: