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e: ________________________ Class: ___________________ Date: __________ ID

s the statement or answers the question.
of the following is not true with regard to the internal audit charter?
fines the authorities and responsibilities for the internal audit activity.ifies the minimum
resources needed for the internal audit activity.ides a basis for evaluating the
internal audit activity.uld be approved by senior management and the board.
engagement-planning tool is general in nature and is used to ensure adequate audit coverage over
time?e l o n g - r a n g e s c h e d u l e . e e n g a g e m e n t p r o g r a m . e a u d i t
a c t i v i t y ’ s b u d g e t . e a u d i t a c t i v i t y ’ s c h a r t e r . function of internal auditing, as
related to internal financial reports, would be to:ure compliance with reporting
procedures.w the expenditure items and match each item with the expenses
incurred.ine if there are any employees expending funds without authorization.tify
inadequate controls that increase the likelihood of unauthorized expenditures.committees
are most likely to participate in the approval of:d i t s t a f f p r o m o t i o n s a n d s a l a r y
i n c r e a s e s . nternal audit report observations and recommendations. u d i t
w o r k s c h e d u l e s appointment of the chief audit executive. to the International
Professional Practices Framework, the independence of the internal audit activityf f i n g a n d
s u p e r v i s i o n . uing professional development and due professional care.a n
r e l a t i o n s a n d c o m m u n i c a t i o n s . a n i z a t i o n a l s t a t u s a n d o b j e c t i v i t y. of the
following actions would be a violation of auditor independence?uing on an audit assignment at a
division for which the auditor will soon beng the scope of an engagement due to budget
restrictions.on a task force which recommends standards of control for a new
distributioniewing a purchasing agent’s contract drafts prior to their execution.
________________________ ID: A
part of a company-sponsored award program, an internal auditor was offered an award of
significantpt the gift since the engagement is already concluded and the report
the award under the condition that any proceeds go to charity.audit management and
ask for direction on whether to accept the gift.line the gift and advise the division
manager’s superior.which of the following situations would an auditor potentially lack
objectivity?itor reviews the procedures for a new electronic data interchange connection
to armer purchasing assistant performs a review of internal controls over purchasing
fourauditor recommends standards of control and performance measures for a contract
withl accounting employee assists an auditor in verifying the physical inventory of CIA,
working as the director of purchasing, signs a contract to procure a large order from the supplier
withptance of the gift would be prohibited only if it were non-customary.ptance of the gift
would violate The IIA’s Code of Ethics and would be prohibited forthe CIA is not acting
as an internal auditor, acceptance of the gift would be governedthe contract was signed
before the gift was offered, acceptance of the gift would notinternal auditor assigned to audit
a vendor’s compliance with product quality standards is the brother of thept the assignment, but
avoid contact with the controller during the assignment, but disclose the
relationship in the engagement finalify the vendor of the potential conflict of
interest.the chief audit executive of the potential conflict of interest.

. selecting an instructional strategy for developing internal audit staff. B o t h a a n d b .of the following is part of an internal audit activity’s quality assurance program.. ill the need for effective succession planning. ________________________ ID: A a positive image within an organization.I. discovers that the director of marketing has a gambling habit.i n v i o l a t i o n o f t h e e in violation of either The IIA’s Code of Ethics or . I a n d I I I o n l y . a n d I V o n l y .. a n d I V o n l y . and IV onl y. and IV onl y. internal auditors should possess which of the. nearly finished with an engagement. authority. I a n d I I o n l y. a r n i n g content.timeline of the audit engagement with management to determine if sufficientauditor. II. .I. the amount of cash and marketable securitiesternal auditors have indicated some difficulties in obtaining account confirmations. III.. I o n l y . I I I . I I .er the possibility of nonconformance or irregularities at all times during andunicate any noncompliance or irregularity discovered during an engagementan assurance engagement of treasury operations. an internal auditor is required to consider all of theg issues audit committee has requested assurance on the treasury department’s complianceanagement has not instituted any risk management policies. I a n d I I o n l y .I. I I o n l y .onstrate sufficient capability to meet the audit plan requirements.III and IV only.. anddividual internal auditor’s performance is appraised at least annually.I I .II.on of an internal auditor’s work is performed throughout each audit . . .________________________ ID: A to the International Professional Practices Framework.. .the recent sales of a division. since it is a high-risk area. a chief audit executive (CAE) planned to conduct ted in the engagement final communications.violation of the IIA Code of Ethics for withholding meaningful information.Budget constraints.permission from the audit committee to obtain appropriate support from an HSEr the engagement and tell the audit committee that it will take several months to trainsure that due professional care has been taken at all times during an engagement. ief audit executive (CAE) has been requested by the audit committee to conduct an engagement at an the engagement and incorporate HSE training into next year’s planning to preparest to the audit committee that the factory’s own HSE staff conduct the engagement.arner’s readiness.. the internal auditorat all financial information related to the audit is included in the audit plan andure that all audit tests are fully documented. I I a n d I I I o n l y .ish credibility with the audit committee and management. ost important reason for the chief audit executive to ensure that the internal audit department hasure that the function is adequately protected from outsourcing. chief audit executive (CAE) for a very small internal audit department has just received a request from ith management the possibility of outsourcing the audit of this complex area. and III onl y. ________________________ ID: A of the following activities are designed to provide feedback on the effectiveness of an internal outside consultant to the audit staff to assist in the performance of the auditpt the audit engagement and begin immediately. rather than beingE provides information about and access to internal audit workpapers to theement approves a formal charter establishing the purpose. a chief audit executive should begin bya n i z a t i o n a l o b j e c t i v e s .

R i s k A . I a n d I V o n l y . 1 a n d 3 o n l y .chief audit executive is reviewing the following enterprise-wide risk map:s k B .A d ve r ti s i ng bu d ge t . Risk D. phasize the importance of the internal audit function. I a n d I I o n l y . 2 a n d 4 o n l y . Risk B. 1 a n d 2 o n l y .sure that the internal audit plan will be approved by senior management.organizational risk in a manufacturing environment. . department outside of the internal audit activity is responsible for reviewing a function or process. ________________________ ID: A a risk assessment process has been used to construct an audit engagement schedule. . which of the external auditors have requested assistance for their upcoming annual audit.chief audit executive (CAE) uses a risk assessment model to establish the annual audit plan.xisting accounts payable system has not been audited over the past year. of the following represents the best risk assessment technique?ent of the risk levels for future events based on the extent of uncertainty of thoseent of inherent and control risks and their impact on the extent of financialent if the risk levels of current and future events. .ide assurance on the management of the risk.w accounts payable system is currently undergoing testing by the informationy department. which of the following would have the mostd u c t i o n s c h e d u l i n g . . I I I o n l y D. and internal auditor should:ermine how the risk should best be managed. 3 a n d 4 o n l y . R i s k C .e recommendations to improve the strategic plan. . s k A . R i s k B . R i s k C. P r o d u c t q u a l i t y . Risk C. sk B. their effect on achievement of theent of the risk levels of current and future events. . Which of the. Risk A. ign controls to mitigate the identified risks. Risk D. v e n t o r y p ol i c y. theer the work of the other department when . organization has asked the CAE to consider the cost savings factor to be twice as important as any other. R i s k D . . . R i s k A .engagement. Risk C. 3 a n d 4 o n l y . . ________________________ ID: A assessing the risk associated with an activity. i g h ( 3 ) M e d i u m ( 2 ) L o w ( 1 ) i g h ( 3 ) L o w ( 1 ) H i g h ( 3 ) o w ( 1 ) H i g h ( 3 ) M e d i u m ( 2 ) e d i u m ( 2 ) M e d i u m ( 2 ) H i g h ( 3 ) audit engagements should the CAE pursue if all factors are weighed equally?.ent has requested an investigation of possible lapping in receivables. 1 a n d 3 o n l y. 2 a n d 4 o n l y . . 1 a n d 2 o n l y .III and IV only. their impact on theof the following is the best reason for the chief audit executive to consider the strategic plan innsure that the internal audit plan supports the overall business objectives. ate the risk management process based on risk exposures.

and disciplines required to perform work are ignored. skills.mend changes in scope to limit bias by the regulatory examiners. internal auditors can rely upon the work of external auditors that is:rmed after the internal audit engagement.nternal audit activity of a large corporation has established its operating plan and budget for the cominguests by management for special projects are not considered. and documentation. ying information technology in audit planning. ducted in accordance with The IIA Code of Ethics. of auditable activities in the organization.e .assessing the function or process. e c h i e f a u d i t e x e c u t i v e . which of rtant factor?have been major changes in operations in one of the departments. ________________________ ID: A the internal audit department to coordinate regulatory examiner’s efforts is beneficial to the organizationnce the regulatory examiners’ interpretation of law to match corporate practice.inating consulting engagements from the engagement work schedule. h assurance and consulting function.arily concerned with operational objectives and activities.the scope of the audit since the work has already been performed by the otherld the responsibility for assessing the function or process to the other department.eciding whether to schedule the purchasing or the personnel department for an audit engagement.t staff has recently added an individual with expertise in one of the areas.ledge.nternal audit activity has recently experienced the departure of two internal auditors who cannot be ng self-assessment questionnaires to address audit objectives.more opportunities to achieve operating benefits in one of the departments thantential for loss is significantly greater in one department than in the other.rability criteria and targeted dates of completion are not provided. e c h i e f e x e c u t i v e o f f i c e r .r d i n a t e d w i t h i n t e r n a l a u d i t a c t i v i t the work of the other department and proceed with an independent audit.has primary responsibility for providing information to the audit committee on the professional ande e x t e r n a l a u d i t o r .mprove audit vacancies with personnel from operating departments that are not being audited. ________________________ ID: A annual audit plan does not allow for adequate review of compliance with all material regulations affectingthat the board of directors and senior management are aware of the limitation.rtunities to achieve operation benefits are ignored.bability that an event or action may adversely affect the organization.fieldwork for the regulatory examiners and thus reduce the amount of timevidence of adequate compliance testing through internal audit workpapers andchief audit executive would most likely use risk assessment for audit planning because it provides:stematic process for assessing and integrating professional judgement about probablesting of potentially adverse effects on the organization.

a memo with the audit planning file listing the reasons for the lack of coverage. of the independence of an organization’s external auditors should:arried out only when the external auditor is appointed.of he following best describes an internal auditor’s purpose in reviewing the organization’s existing risk p determine the nature. t e r n a l a u d i t l i a i s o n . II. the timely implementation of audit recommendations. minimizing interactions with line managersarily on asset management and report results to the audit committee. d u c t d e v e l o p m e n t t e a m l e a d e r. I I a n d I I I o n l y. . E t h i c s a d v o c a t e .ide reasonable assurance that the processes will enable the organization’stermine whether the processes ensure that the accounting records are correct and thatof the following represents the best governance structure? p e r a t i n g M a n a g e m e n t E x e c u t i v e M a n a g e m e n t I n t e r n a l A u d i t i n g sponsibility for risk .primarily with senior management. and assessment of the organization’s systemow up on whether appropriate management actions have been taken on significantstatement most accurately describes how criteria are established for use by internal auditors ing whether goals and objectives have been accomplished?ement is responsible for establishing the criteria.I. I I o n l y . I V o n l y .e the internal audit activity at the time of appointment and . ________________________ ID: A a well-developed management environment. .the scope of operational and financial audits to make additional audit timeof the following comments is correct regarding the assessment of risk associated with two projects thatnt. I o n l y . III. . I o n l y .itor compliance with the corporate code of conduct. . the internal audit activity would:e results of an audit engagement to line management as well as to seniorct initial audits of new computer systems after they have begun operating. I a n d I I I o n l y .ent that regulations not included will be reviewed in the subsequent year. .Oversight role of the following is municate the internal audit activity’s plans and resource requirements to seniorrdinate with other internal and external providers of audit and consulting services toersee the auditors should use professional standards or government regulations to establishndustry in which a company operates establishes criteria for each member companyaccounting or auditing standards.Oversight role sponsibility for risk . and extent of tests necessary to achieve engagementnsure that weaknesses in the internal control system are corrected. of the following activities undertaken by the internal auditor might be in conflict with the standard of s k m a n a g e m e n t c o n s u l t a n t . s c u s s a r e a s o f s i g n i f i c a n t r i s k s .e the internal audit activity only when the external auditor is appointed. I I I o n l y . timing.. . nclude any participation by the internal audit activity. internal audit activity should contribute to the organization’s governance process by evaluating the. . and IV. administration. should be ________________________ ID: A of the following is rt the board in enterprise-wide risk assessment. including international standards.

I n s u r i n g . I I o n l y .____ 58. . An audit of an organization’s compensation system should be performed independently of an audit of thecontrol system over other functions that impact corporate bonuses. b. B e t t e r m a n a g e p e r c e i v e d h i g h r i s k s .d.Strengthen controls over the bank’s investments. Which of the following statements is correct regarding corporate compensation systems and related bonuses?I. excluding the CEO. b . Compensation systems are not part of an organization’s control system and should not be reported as such.d . Which of the following statements regarding corporate governance is not correct?a. To minimize potential financial losses associated with physical assets. a chief audit executive (CAE) suspects that a supplier was given an unfairit a draft report to senior management. b . F a c t o r i n g .has a formal corporate code of ethics while company B does not.a . D e t e r m i n e d b y t h e b o a r d o f d i r e c t o r s . .Manages risk as a member of senior management.Shares the management of risk with the chief audit executive. and the board of directors are responsible for following up on observations and recommendationsnternal audit activity should have no role in this process in order to ensureternal audit activity should only become involved if the chief audit executive hasnternal audit activity should establish a monitoring process to review the adequacyternal audit activity should become involved only if specifically requested by Name: ________________________ ID: A 12____ 53.II a n d I I I o n l y . A bonus system should be considered part of the control environment of an organization and should beconsidered in formulating a report on internal control.a review of contracts.Better respond to shareholder expectations. c .b.III. c .____ 55. I I I o n l y .Corporate control mechanisms include internal and external mechanisms.Ensure the independence of line and senior management. b .c. I a n d I I o n l y.Automatically adjusted by an economic indicator such as the consumer price index.II.Shares the management of risk with line management. the assets should be insured in anamount that is:a .Monitors risk as part of the enterprise risk management team. The code of ethics covers such.d.Equal to the book value of the individual assets. tact the organization’s external auditors for assistance. I o n l y .The compensation scheme for management is part of the corporate control mechanisms. c. . The primary reason that a bank would maintain a separate compliance function is to:a . I I o n l y . H e d g i n g . ____ 54.d.b. orting documentation and present the finding to the chairperson of the auditediately notify the board of directors.The dilution of shareholders’ wealth resulting from employee stock options or employeestock bonuses is an accounting issue rather than a corporate governance issue.c.The internal auditor of a company has more responsibility than the board for thecompany’s corporate governance.____ 56.d. S u p p o r t e d b y p e r i o d i c a p p r a i s a l s . S h o r t selling.c.regularly thereafter. ____ 57. . d. The activity of trading futures with the objective of reducing or controlling risk is called:a . The function of the chief risk officer (CRO) is most effective when the CRO:a. I I I o n l y .II a n d I I I o n l y .

Controlling. Which of the following is a control deficiency in this situation?a.d. c. B r e a k u p o f e x i s t i n g w o r k g r o u p s . b .b . M i n i m i z e l o s s e s . A c c e p t i n g . I o n l y . T h r e a t o f l o s s o f j o b s . Many products areseasonal and individual store managers can require that seasonal products be removed to make space for thenext season’s products. c . Because receipts are recorded atthe distribution center. the company does not maintain a receiving function at each store. b .Underlying risk in the environment. c. Which of the following goals sets risk management strategies at the optimum level?a . d . d. M i n i m i z e c o s t s .d . R e q u i r e d a t t e n d a n c e a t t r a i n i n g c l a s s e s .d. M a x i m i z e m a r k e t s h a r e .The marketing department for a major retailer assigns separate product managers for each product line.The product manager negotiates the purchase price and sets the selling price.Name: ________________________ ID: A 13____ 59.Imposition of new processes by . I I .Involves the identification of events with negative impacts on organizational objectives.The organization’s environment. c . which is least likely?a .c. I m p a c t o f r i s k .There is no receiving function located at individual stores.The o r g a n i z a t i o n ’ s t e c h n o l o g y. What is residual risk?a . Name: ________________________ ID: A 14____ 64.II. I I I o n l y .b. T h e o r g a n i z a t i o n ’ s s t r u c t u r e .The store manager can require items to be removed.Transferring. thus affecting the potentialperformance evaluation of individual product managers. d. c . Should provide for the most efficient allocation of scarce organizational resources. a n d I I I . Many organizations use electronic funds transfer to pay their suppliers instead of issuing checks. T h e o r g a n i z a t i o n ’ s m e m b e r s . An organization’s management perceives the need to make significant changes. ____ 65.d.Requires establishment of risk and control activities by internal auditors. R i s k t h a t i s u n d e r c o n t r o l . ____ 63.Includes selection of the best risk response for the organization.Product managers are responsible for ordering products and determining retail pricing.Guarantees achievement of organizational objectives. Requests for purchases beyond those initially budgeted must be approved by the marketing manager.____ 61. b . Product managers areevaluated on a combination of sales and gross profit generated from their product lines.II and III only. ____ 62. R i s k t h a t i s n o t m a n a g e d . Products are delivered to a central distribution center wheregoods are segregated for distribution to the company’s 52 department stores.III.____ 60. Is a detective control procedure.b. Is unnecessary because each product manager is evaluated on profit generated. Regarding therisks associated with issuing checks. M a x i m i z e s h a r e h o l d e r v a l u e ____ 66. A v o i d i n g . Each product manager’spurchasing budget is set by the marketing manager. Thisprocedure:I.a . b . Which of the following factorsis management least likely to be able to change?a .d . I . Of the following reasons for employees to resist a major change in organizational processes. b .Evaluating product managers by total gross profit generated by product line will lead tdysfunctional behavior. which of the following risk management techniques does this represent? a. c.c. Enterprise risk management:a.

two members of the team disagree. Which of the following observations by an auditor are most likely to indicate the existence of controlweaknesses over safeguarding of assets?I. and advisory signs) which substances may be disposed of via sinks and floor drains within the factory. During a meeting of an internal audit project team.Meet with both auditors after the meeting to resolve the conflict and the inappropriatebehavior.Automatic reorder by the purchasing department when low inventory level is indicated bythe system.Develop the new approach fully before presenting it to the audit staff. The bestway to reduce resistance would be to:a.II. O r g a n i z a t i o n a l c h a n g e . Name: ________________________ ID: A 15____ 70. Employees hired for sensitive positions are not subjected to background checks. I a n d I V o n l y .Approach the staff with the general idea and involve them in the development of thechanges.b. The control that would most likely ensure that payroll checks are written only for authorized amounts is to:a. A control likely to prevent purchasing agents from favoring specific suppliers is:a. d .c.Product change.b.b.A policy requiring review of the purchase order before receiving a new shipment.____ 67. All of the following would be part of a factory’s control system to prevent release of waste water that does notmeet discharge standards except :a.senior management without prior discussion. for components specified inthe permit.III.Establishing a preventive maintenance program for the factory’s pretreatment system. b .Stop the meeting and refer the matter to the entire team for discussion.Ask the chief executive officer (CEO) to approve the changes and have the CEO attend thedepartmental staff meeting when they are presented. This type of change is a:a .c. c .____ 71.c. Which of the following controls would prevent the ordering of quantities in excess of an organization’s need?a. C u l t u r a l change. Managers do not have access to reports that profile overall performance in relation to other benchmarkedorganizations.Require supervisory approval of employee time cards.Requiring management’s review of a monthly .c.Specifying (by policy training.____ 68.Get the internal audit activity’s clients to support the changes.c.A policy requiring agreement of the receiving report and packing slip before storage of new receipts.____ 73. ____ 69.Continue the meeting but speak to the accusing auditor later regarding the inappropriateconduct. ____ 74.IV. An organization is changing to a quality assurance program that incorporates quality throughout the process.b.Review of all purchase requisitions by a supervisor in the user department prior tosubmitting them to the purchasing department.d. The audit manager should:a.d.Periodically flushing sinks and floor drains with a large volume of clean water to ensurepollutants are sufficiently diluted.Require the return of undelivered checks to the cashier.d. I I a n d I I I o n l y .Discipline both auditors after the meeting for their lack of professional conduct.a .Conduct periodic floor verification of employees on the payroll.d.b. prior to discharge. ____ 72.b. and one accuses theother of trying to advance personal interests over the interests of the audit. Management has not taken corrective action to resolve past engagement observations related to inventorycontrols.Periodically witness the distribution of payroll checks.Performing chemical analysis of the water. A service department’s location is not well suited to allow adequate service to other units. I a n d I I o n l y . A chief audit executive plans to make changes that may be perceived negatively by the audit staff. I I a n d I V o n l y .This is very different from its years of dependence on quality control at the end of the process.Structural c h a n g e . d .d.c.

____ 76.The existence of a sophisticated accounts payable system that correlates overpayments toopen invoices and therefore requires no further audit concern. ____ 77.____ 78. An auditor. discovered a significant lack of of the totals spent by each buyer. an auditor found that several accounts payable vouchers for major suppliersrequired adjustments for duplicate payment of prior invoices.c. along with a decrease in product sales.b.An increase in product sales.Requiring buyers to adhere to detailed material specifications. Which of the following would minimize defects in finished goods caused by poor quality raw materials?a.A statistical sample to review key employee attitudes. The requirement that purchases be made from suppliers on an approved vendor list is an example of a:a .____ 80. skills.The branch manager receive all wire transfers. d .A need for additional testing to determine related controls and the current exposure toduplicate payments made to suppliers.The individual who initiates wire transfers not reconcile the bank statement.Required material specifications for all purchases.c.A decrease in sales returns.Foreign currency rates be computed separately by two different employees. d.Rotating buyers assignments periodically.Insufficient controls in the receiving area to ensure timely notice to the accounts payablearea that goods have been received and inspected.b.c. aligning with an increase in commissions.c. Name: ________________________ ID: A 16____ 75.d.A standardized questionnaire used to obtain an understanding of management objectives.Monitoring the number of orders placed by each buyer.Determination of the amount of spoilage at the end of the manufacturing process.c.b.Documented procedures for the proper handling of work-in-process inventory. and knowledge. During a preliminary survey.d. This would indicate:a.c.A walk-through of the financial control system to identify risks and the controls that canaddress those risks.____ 79.____ 82. M o n i t o r i n g c o n t r o l . Appropriate internal control for a multinational corporation’s branch office has a monetary transfer unitrequires that?a. Which of the following best describes a preliminary survey?a.Review minutes of the board of directors’ meetings to identify changes in policies affectinginvestments and loans. Name: ________________________ ID: A 17____ 81.Timely followup-up on all unfavorable usage variances.b.Review reports of audits performed by regulatory and outside auditors since the lastinternal audit engagement.b. During an assessment of the risk associated with sales contracts and related commissions.d.The possibility of unrecorded liabilities for the amount of the overpayments.d. along with an increase in commissions. P r e v e n t i v e control. along with an increase in product sales. experienced in air-quality issue.b.b. Which of the following procedures should be performed as part of a preliminary review in an audit of a bank’sinvesting and lending activities? a.Detective control.d.A process used to become familiar with activities and risks in order to identify areas forengagement emphasis.d .b.A decrease in sales commissions.Interview management to identify changes made in policies regarding investments or loans. which of thefollowing factors would most likely result in an expansion of the engagement scope?a.c.Corporate management approve the hiring of monetary transfer unit employees.An increase in sales returns. A l l o f t h e a b o v e .Corrective c o n t r o l .

To o b s e r v e t h e p h ys i c a l i n v e n t o r y c o u n t .unicate the potential effects of the scope limitation to the audit committee of therease the frequency of auditing the activity in question.c. ________________________ ID: A auditor’s preliminary evaluation of internal controls results in an observation that controls may beaudit work prior to the preparation of an engagement final communication.Determine best practices in the area and use them as the standard. Which of the following is an appropriate statement of an audit engagement objective?a .b.knowledge about legalrequirements for controlling air emissions while interviewing the manager of the environmental.Share extensive personal knowledge with the EHS manager. of the following internal controls would have most likely prevented this fraud from occurring?ing predefined spending levels for all vendors during the bidding process.Determine whether the treasurers is getting higher or lower rates of return on investmentsthan are treasurers in comparable organizations.____ 84. b. health.c.d.Omit any comments on standards and the department’s performance in relationship tothose standards.owchart depicting the internal control system.Interpret the standards in their strictest sense because standards are otherwise onlyminimum measures of acceptance. ign more experienced personnel to the engagement. Which of the following would not be required as part of such an engagement?a.Determine the extent of management oversight over investments in sophisticatedinstruments.____ 83.____ 85.auditor has been assigned to analyze the effectiveness of a set of rehabilitation programs. The programsthe analysis anyway.g the company’s inventory system to match quantities requested with quantitiesof the following tests would best assist the auditor in deciding whether to investigate this anonymous tipn of the current quarter’s maintenance expense with priorperiod activity.To search for the existence of obsolete inventory by computing inventory turnover byproduct line.Take note of the weakness and direct additional questions to determine the potential effectofthelackof knowledge. an auditor should:a.d.Seek agreement with the departmental manager as to the criteria needed to measureoperating performance. The auditor should:a. a chief audit executive should:ay the engagement until scope limitation is exception in the engagement final communication if losses have inventory testing of replacement parts for existence and valuation. An internal auditor plans to conduct an audit of the adequacy of controls over investments in new financialinstruments.sis of repair parts charged to maintenance to review the reasonableness of thew of a test sample of parts invoices for proper authorization and receipt.Determine if policies exist which describes the risks the treasurer may take and the types of instruments in which the treasurer may make investments. assessing the effects of the incomplete data.To determine whether inventory stocks are sufficient to meet projected sales.Alter the scope of the engagement to focus on activities associated with any emissions.ating the receiving function from the authorization of parts purchases.Determine he nature of controls established by the treasurer to monitor the risks in theinvestments. If a department’s operating standards are vague and thus subject to interpretation.b.b.Report potential violations in this area to the appropriate regulatory agency. but disclaim anymly chosen set of records to .faced with an imposed scope limitation.c.g the bill of lading for replacement parts to the approved purchase order.c.d.d.p l e m e n t t h e d e s i r e d c o n t r o l s . andsafety (EHS) department. because such an analysis would be inappropriate.To include information about stockouts in the engagement final communication.

adequate system of internal controls is most likely to detect an irregularity perpetrated by a:u p o f e m p l o ye e s i n c o l l u s i o n . ternal audit supervisor.that engagement objectives have been met is ultimately the responsibility of the:t e r n a l a u d i t o r . testcal inventory of equipment to determine if there were significant changes.mplex or changing operating environment.means of controlling projects and avoiding time-budgets overruns. one the analysis until data are complete.ntial for significant regulatory fines associated with the ongoing engagement. nt inventory audit engagements performed at the same location. Which of ine if access controls are sufficient to restrict the input of incorrect data into thegeneralized audit software to develop a complete list of the parts shortages that causedect a random sample of parts on hand per the personal computer database and comparet a random sample of production information for selected days and trace input intoof the following audit procedures would be most effective in determining if purchasing requirementsculate parts needed based on current production estimates and the MRP for thelop test data to input into the LAN and compare purchase orders generated from testgeneralization audit software to develop a report of excess inventory. a n d c r e d i t t h e a s s e t .t i p l e b r a n c h e s w i t h s i m i l a r o p e r a t i o n s .b i t r e v e n u e . it another asset account.engagement programs testing internal controls should:a i l o r e d f o r t h e a u d i t o f e a c h o p e r a t i o n . ncrease in the level of expenditures experienced by the division for the past year. a n d c r e d i t t h e a s s e t . management stated that a recent gross margin increase was due to increased efficiency ina i n a p h ys i c a l c o u n t i f i n v e n t o r y.ediately after expanding tests to establish reliability of observations. it the asset.source files to asses the accuracy and t p e r f o r m t h e a n a l y s i s . S i n g l e m a n a g e r .eneralized so as to be usable at various international locations of an organization. u p o f m a n a g e r s i n c o l l u s i o n .tential for fraud associated with the ongoing engagement.t a sample of finished goods inventory and trace raw materials cost back to purchaseline has experienced shutdowns because needed production parts were not on hand. inexperienced audit staff members are assigned to an engagement. decisions to revise time budgets for anediately after completing the preliminary survey. n g l e e m p l o y e e . then compare costs-per-unit this year to those of last year.n a significant deficiency has been substantiated. standardized internal audit engagement program would operating environment undergoing only minimal changes. and credit the asset. Compare thet a sample of production estimates and MRPs for several periods and trace them into ________________________ ID: A of the following factors would be considered the nt?nancial audit of the division performed by the external auditor a year ago. u d i t c o m m i t t e e .ief audit executive. . t a sample of products. eneralized to fit all situations without regard to departmental lines.costly duplication of effort by ensuring that every aspect of an operation is . and credit another asset account. ________________________ ID: A of the following fraudulent entries is most likely to be made to conceal the theft of an asset?b i t e x p e n s e s .

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