Topic 1: Volume A
Which of the following describes a control weakness?
A.
Purchasing procedures are well designed and are followed unless otherwise directed by
the purchasing supervisor.
B.
Pre-numbered blank purchase orders are secured within the purchasing department.
C.
Normal operational purchases fall in the range from $500 to $1,000 with two signatures
required for purchases over $1,000.
D.
The purchasing agent invests in a publicly traded mutual fund that lists the stock of one
of the company's suppliers in its portfolio.
Purchasing procedures are well designed and are followed unless otherwise directed by
the purchasing supervisor.
Which source of audit evidence would provide the least value in flowcharting an
organization's purchasing process?
A.
An interview with the purchasing supervisor.
B.
A review of a sample of purchase orders which were completed during the last month.
C.
A review of the purchasing policies and procedures manual.
D.
A walk-through of the process with a member of the purchasing staff.
A review of a sample of purchase orders which were completed during the last month.
Two individuals are being considered for an audit team that is to perform a highly technical review.
Which of the following situations would preclude selection of the individual for the audit due
to an objectivity concern?
I. Person A is a member of the internal audit staff and has the required technical skills.
Person A participated in a controls review of the system to be audited when it was being
developed.
II.Person B is a technical specialist who understands the audit area but is not a member of
the internal audit staff. Although person B has personal credibility in the information
systems department to be audited,person B works for another department in the
organization.
A.
Ionly
B.
IIonly
C.
Both I and II.
D.
Neither I nor II.
Neither I nor II.
It would be appropriate for an internal audit activity to use consultants with expertise in
health-care benefits when the internal audit activity is:
I. Conducting an audit of the organization's estimate of its liability for post retirement
benefits,which include health care benefits.
II.Comparing the cost of the organization's health care program with that of other programs
offered in the industry.
III.Training its staff to conduct an audit of health care costs in a major division of the organization.
A.
Ionly
B.
I and IIIonly
C.
II and IIIonly
D.
I,II,and III.
I,II,and III.
Which of the following audit activities is within the scope of assurance activities as stated in
the International Professional Practices Framework?
A.
Review a make-or-buy decision and report a recommendation to management for approval.
B.
Participate in negotiations for a corporate acquisition.
C.
Assess financing alternatives for a new generator.
D.
Perform an evaluation of management's planning process.
Perform an evaluation of management's planning process.
Which of the following corporate travel policies is least likely to be cost-effective?
A.
Negotiating corporate agreements with hotels,airlines,and car rental firms.
B.
Tracking credits for canceled airline reservations.
C.
Selecting the least expensive airline travel available,without regard to total travel time and distance.
D.
Traveling to facilities in tourist areas during the off-season when possible.
Selecting the least expensive airline travel available,without regard to total travel time and distance.
An objective for an audit of a medical research corporation is to evaluate management's
controls to ensure that timely reports are submitted to sponsors of contracted research
projects. In planning the audit to achieve this objective,the auditor should begin by:
A.
Reviewing policies and procedures.
B.
Interviewing a group of research managers.
C.
Observing report preparation in a number of laboratories.
D.
Sending a questionnaire to a sample of research sponsors.
Reviewing policies and procedures.
Which of the following is a role of the board of directors in the governance process?
A.
Conduct periodic assessments of the organization's governance systems.
B.
Obtain assurance concerning the effectiveness of the organization's governance systems.
C.
Implement an effective system of internal controls to support the organization's governance systems.
D.
Review and approve operational goals and objectives.
Obtain assurance concerning the effectiveness of the organization's governance systems.
Management has requested that an internal auditor serve as member of a task force that
will review current receivables practices and make recommendations to improve
processes. Which of the following is the most appropriate response by the internal auditor?
A.
Accept the assignment provided that such consulting services are defined in the charter.
B.
Decline the assignment because participation on task forces will impair the auditor's
objectivity in future audit engagements.
C.
Accept the assignment if the auditor believes that it will not impair objectivity in future audit engagements.
D.
Do not accept the assignment because the assignment is not part of an approved audit plan.
Accept the assignment provided that such consulting services are defined in the charter.
An auditor for a large wholesaler is evaluating the controls over the approval and oversight
of credit sales. Which of the following procedures would be a control weakness?
A.
The credit department is responsible for approving shipments to all customers.
B.
The finance committee of the board of directors periodically reviews credit standards.
C.
Customers who fail to meet credit requirements must pay cash for shipments upon delivery.
D.
The sales department is responsible for determining the credit ratings of customers.
The sales department is responsible for determining the credit ratings of customers.
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