IIA IIA-CIA-Part2 Quiz 43 Topic 7 Questions 211-215

Question: 1

Confirmation would be most effective in addressing the existence assertion for:

AThe addition of a milling machine to a machine shop.

BSales of merchandise during the regular course of business.

CInventory held on consignment.

DThe granting of a patent for a special process developed by the organization.

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Question: 2

What is the most likely source of information for a detailed schedule of a company's insurance policies in force?

AOriginal journal entries found in the cash disbursements journal, along with supporting checks processed by the bank.

BPolicies and procedures governing insurance coverage.

CThe current fiscal year's budget for insurance, together with the beginning balance of the prepaid insurance account.

DThe files containing insurance policies with various carriers.

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Question: 3

Which of the following factors would not be considered in determining appropriate follow-up procedures?

AThe significance of the audit finding.

BThe effort and cost needed to correct the reported condition.

CThe availability of funds in the audited department's budget to correct the reported condition.

DThe potential consequences if the corrective action fails.

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Question: 4

Persuasive evidence indicates that a member of senior management has been involved in insider trading that would be considered fraudulent. However, the evidence was encountered during an operational audit and is not considered relevant to the audit. Which of the following is the most appropriate action for the chief audit executive to take?

AReport the evidence to external legal counsel for investigation. Report the legal counsel findings to management.

BReport the evidence to the chairperson of the audit committee and recommend an investigation.

CConduct sufficient audit work to conclude whether fraudulent activity has taken place, then report the findings to the chairperson of the audit committee and to government officials if appropriate action is not taken.

DDiscontinue audit work associated with the insider trading since it is not relevant to the existing audit.

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Question: 5

An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board iF.

I.

In the opinion of the CAE, the level of residual risk assumed by senior management is too high.

II.

Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.

III.

The cost of modifying the sales system to include a preventive control is less than $100,000.

AI only

BIII only

CI and III only

DI, II, and III

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IIA IIA-CIA-Part2 Quiz:43 Topic:7 Questions:211-215