Which of the following is not a benefit of using information technology in solving audit problems?

A.

It helps reduce audit risk.

B.

It improves the timeliness of the audit engagement.

C.

It increases audit opportunities.

D.

It improves the auditor's judgment.

An audit of the quality control department is being planned. Which of the following would
least likely be used in the preparation of a preliminary survey questionnaire?

A.

An analysis of quality control documents.

B.

The permanent audit file.

C.

The prior audit report.

D.

Management's charter for the quality control department.

In advance of a preliminary survey,a chief audit executive sends a memorandum and
questionnaire to the supervisors of the department to be audited. What is the most likely
result of that procedure?

A.

It creates apprehension about the audit engagement.

B.

 It involves the engagement client's supervisory personnel in the audit.

C.

It is an uneconomical approach to obtaining information.

D.

It is only useful for audits of distant locations.

Which of the following lists the audit activities in the order in which they would generally be
completed during a preliminary survey?
I. Write detailed audit procedures.
II.Identify client objectives,goals,and standards.
III.Identify risks and controls intended to prevent associated losses.
IV.Determine relevant engagement objectives.

A.

II,I,IV,III.

B.

II,III,IV,I.

C.

III,IV,II,I.

D.

II,IV,I,III.

During a payroll audit of a large organization,an 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 auditorshould:

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.

Human resources and payroll are separate departments. Which of the following
combinations would provide the best segregation of duties?

A.

Human resources personnel add employees,payroll personnel process hours,and
human resources personnel deliver paychecks to employees.

B.

Human resources personnel add employees,review and submit payroll hours to the
payroll department for processing,and deliver paychecks to employees.

C.

Human resources personnel add employees,and payroll personnel process hours and
enter employee bank account numbers. Paychecks are automatically deposited in the
employee's bank account.

D.

Payroll personnel add employees and enter employee bank account numbers but
process hours only as approved by the human resources department. Paychecks are
automatically deposited in the employee's bank account.

To determine if a new computer system is improving the use of a manufacturer's limited
facilities in serving the largest number of customers,an auditor shouldcompare.

A.

The number of reworked orders and their costs before and after system installation.

B.

Inventory and materials handling costs before and after system installation.

C.

The number of orders filled and their cycle times before and after system installation.

D.

The number of reworked orders and orders filled before and after system installation.

To identify those components of a telecommunications system that present the greatest
risk,an internal auditor should first:

A.

Review the open systems interconnect network model.

B.

Identify the network operating costs.

C.

Determine the business purpose of the network.

D.

Map the network software and hardware products into their respective layers.

A manufacturer uses a materials requirements planning (MRP) system to track
inventory,orders,and raw materials requirements. What condition should an auditor search
for in the MRP database if a preliminary assessment indicated that inventory is
understated?
I.Item cost set at zero.
II.Negative quantities on hand.
III.Order quantity exceeding requirements.
IV.Inventory lead times exceeding delivery schedule.

A.

I and IIonly

B.

I and IVonly

C.

II and IVonly

D.

III and IVonly

An audit to test the system of controls over the purchase,distribution,and use of radioactive
material is being conducted at a company's plants. The process is well documented,and
employees in the safety department are very familiar with the department's procedures.
Since the purchasing and facilities departments are involved in the process,the auditor is
considering reviewing their radioactive material-handling procedures as well. The auditorshould:

A.

Have confidence in the rigorous and detailed safety department procedures,since that
department has the main responsibility for radiation safety,and should not use audit time to review other departments.

B.

Adjust the engagement schedule and budget,if needed,and interview the appropriate
individuals in the purchasing and facilities departments to ascertain whether additional
controlsexist that complement those identified within the safety department.

C.

Test the controls identified within the safety department; if results are unfavorable,the
auditor should consider whether to involve the other departments.

D.

Defer questions regarding purchasing,facilities,and other departments until audit
projects can be scheduled for those departments.