IIA IIA-CIA-Part2 Quiz 204 Topic 5 Questions 1016-1020

Question: 1

While conducting a payroll audit, an internal auditor in a large government organization found inadequate segregation in the duties assigned to the assistant director of personnel. When the auditor explained the risk of fraud, the assistant director became upset, terminated the interview, and threatened to sue the organization for defamation of character if the audit engagement was not curtailed. The auditor discussed the situation with the chief audit executive (CAE). The CAE should then

ACurtail the audit engagement to avoid potential legal action.

BProvide a report to senior management recommending a fraud investigation.

CContinue the original engagement program as planned but include a comment about the assistant director's reaction in the engagement final communication.

DAdd additional testing to determine whether other indicators of fraud exist.

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Question: 2

The following are potential sources of evidence regarding the effectiveness of a division's total quality management program. The least persuasive evidence would be a comparison of

AEmployee morale before and after program implementation.

BScrap and rework costs before and after program implementation.

CCustomer returns before and after program implementation.

DManufacturing and distribution costs per unit before and after program implementation.

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Question: 3

New credit policies have been implemented in an automated order entry system to improve the collection of receivables. Sales management has compiled several examples that show decreased sales and delayed order entry, and contends that these examples are a direct result of the new credit policy constraints. Sales management's data and information provide

AFeedback control data.

BIrrelevant and argumentative information.

CEvidence that the new credit policies do not meet the stated corporate objective to improve collections.

DA statistically valid conclusion about the impact of the new credit policies on customer goodwill.

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Question: 4

Productivity statistics are provided quarterly to a company's board of directors. An auditor checked the ratios and other statistics in the four most recent reports. The auditor used scratch paper and copies of the board reports to verify the accuracy of computations and compared the data used in the computations with supporting documents. The auditor wrote a note describing this work for the workpapers and then discarded the scratch paper and report copies. The auditor's note stated .The ratios and other statistics in the quarterly board reports were checked for the last four quarters, and appropriate supporting documents were examined. All amounts appear to be appropriate. In this situation

AFour quarters is not a large enough sample on which to base a conclusion.

BThe auditor's workpapers are not sufficient to facilitate an efficient review of the auditor's work.

CThe auditor should have included the scratch paper in the workpapers.

DThe auditor should have considered whether the information in the board report was compiled efficiently.

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Question: 5

An internal audit activity implemented an integrated test facility to test payroll processing. The auditors identified the key controls and processing steps built into the computer program and developed test data to test them. The auditors submitted test transactions throughout the year and did not find any differences in their test results. The auditors can conclude that

AThe system is properly capturing the hours worked by employees during the year and the hours have been properly submitted to payroll and processed correctly.

BAll employees were correctly paid during the year and their pay was correctly computed.

CThe computer application and its control procedures were processing payroll transactions correctly during the past year.

DAll of the above.

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IIA IIA-CIA-Part2 Quiz:204 Topic:5 Questions:1016-1020