29 Jun w5 auditing hw
eek 5
| 1
What characteristic of information is satisfied by an original signed document? |
|
| A. | Sufficiency. |
| B. | Relevance. |
| C. | Reliability. |
| D. | Usefulness. |
2
3
| An internal auditor decides to perform an inventory turnover analysis for both raw materials inventory and finished goods inventory. The analysis would be potentially useful in | |
| A. | Identifying potential problems in purchasing activities. |
| B. | Identifying obsolete inventory. |
| C. | Identifying products for which management has not been attuned to changes in market demand. |
| D. | All of the answers are correct. |
4
| An internal auditor has set an engagement objective of determining whether all cash receipts are deposited intact daily. To satisfy this objective, the internal auditor interviewed the controller who gave assurances that all cash receipts are deposited as soon as is reasonably possible. As information that can be used to satisfy the stated engagement objective, the controller’s assurances are | |
| A. | Sufficient, reliable, and relevant. |
| B. | Sufficient but not reliable or relevant. |
| C. | Relevant but not sufficient or reliable. |
| D. | Not sufficient, reliable, or relevant. |
5
| When an auditor performs tests on a computerized inventory file containing over 20,000 line items, that auditor can maintain independence and perform most efficiently by | |
| A. | Using the systems department’s programmer to write an extraction program. |
| B. | Obtaining a printout of the entire file and then selecting each nth item. |
| C. | Using a generalized audit software package. |
| D. | Asking the console operator to print every item that costs more than US $100. |
6.
| In engagement planning, internal auditors should review all relevant information. Which of the following sources of information would most likely help identify suspected violations of environmental regulations? | |
| A. | Discussions conducted with the external auditors in coordinating engagement efforts. |
| B. | Review of correspondence the entity has conducted with governmental agencies. |
| C. | Discussions with operating executives. |
| D. | Review of trade publications. |
7
| An internal auditor’s objective is to determine the cause of inventory shortages shown by the physical inventories taken by an independent service organization that used some engagement client personnel. The internal auditor addresses this objective by reviewing the count sheets, inventory printouts, and memos from the last inventory. The source of information and the sufficiency of this information are | |
| A. | Both external and internal and sufficient. |
| B. | Internal and not sufficient. |
| C. | Both external and internal and not sufficient. |
| D. | External and sufficient. |
8
| Insurers may receive hospitalization claims directly from hospitals by computer media; no paper is transmitted from the hospital to the insurer. Which of the following controls is most effective in detecting fraud in such an environment? | |
| A. | Use integrated test facilities to test the correctness of processing in a manner that is transparent to data processing. |
| B. | Develop monitoring programs to identify unusual types of claims or an unusual number of claims by demographic classes for investigation by the claims department. |
| C. | Develop batch controls over all items received from a particular hospital and process those claims in batches. |
| D. | Use generalized audit software to match the claimant identification number with a master list of valid policyholders. |
9
| Ordinarily, what source of information should most affect the internal auditor’s conclusions? | |
| A. | Informal. |
| B. | External. |
| C. | Inquiry. |
| D. | Oral. |
10
| To verify the proper value of costs charged to real property records for improvements to the property, the best source of information is | |
| A. | A letter signed by the real property manager asserting the propriety of costs incurred. |
| B. | Comparison of billed amounts with contract estimates. |
| C. | Original invoices supporting entries into the accounting records. |
| D. | Inspection by the internal auditor of real property improvements. |
11
| While testing a division’s compliance with company affirmative-action policies, an auditor found that
1. 5% of the employees are from minority groups. 2. No one from a minority group has been hired in the past year. The most appropriate conclusion for the auditor to reach is that |
|
| A. | Insufficient evidence exists of compliance with affirmative-action policies. |
| B. | The division is violating the company’s policies. |
| C. | The company’s policies cannot be audited and hence cannot be enforced. |
| D. | With 5% of its employees from minority groups, the division is effectively complying. |
12
| Which of the following cannot be performed by an auditor using generalized audit software (GAS)? | |
| A. | Correcting erroneous data elements, making them suitable for audit testwork. |
| B. | Matching identical product information in separate data files. |
| C. | Identifying missing check numbers. |
| D. | Aging accounts receivable. |
13
| An organization provides credit cards to selected employees for business use. The credit card company provides a computer file of all transactions by employees of the organization. An auditor plans to use generalized audit software (GAS) to select relevant transactions for testing. Which of the following would not be readily identified using GAS? | |
| A. | Suppliers used by each cardholder. |
| B. | Transactions for specific cardholders. |
| C. | Fraudulent transactions. |
| D. | High-monetary-amount transactions. |
14
| Which result of an analytical procedure suggests the existence of obsolete merchandise? | |
| A. | Decrease in the ratio of inventory to accounts payable. |
| B. | Decrease in the inventory turnover rate. |
| C. | Decrease in the ratio of gross profit to sales. |
| D. | Decrease in the ratio of inventory to accounts receivable. |
15
| The most conclusive information to support supplier account balances is obtained by | |
| A. | Reviewing the vendor statements obtained from the accounts payable clerk. |
| B. | Performing analytical account analysis. |
| C. | Interviewing the accounts payable manager to determine the internal controls maintained over accounts payable processing. |
| D. | Obtaining confirmations of balances from the suppliers. |
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