IIA IIA-CIA-Part2 Quiz 216 Topic 9 Questions 1076-1080

Question: 1

An internal auditor downloaded all database records pertaining to payables, purchases, production, inventory, and receivables, and wrote a program to verify that

All payables had an authorizing purchase order.

All production materials were legitimate inventory items.

All receivables derived from production.

What is the internal auditor testing?

AReferential integrity.

BModeling consistency.

CData redundancy.

DConcurrency control.

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Question: 2

An internal audit activity has just completed a fraud investigation involving the company's president. Before the audit report is issued, a front page article appears in a major newspaper alleging that the president has been using the organization's funds for personal purposes. The chief audit executive (CAE), who has enough information to confirm the allegations, is contacted by the newspaper to confirm the facts. Which of the following would be the best response by the CAE?

ARespond truthfully and fully since the CAE is in a position to confirm the facts.

BDirect the inquiry to the audit committee or the board of directors.

CProvide information 'off the record' so that the article does not state who provided the information.

DRespond that the investigation is not complete.

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Question: 3

An auditor receives anonymous information that fraud is occurring in the operation being audited, but no details are given as to the type of fraud or the individuals involved. There are several areas in which fraud could occur. The auditor should

AIdentify the area that has the greatest volume of transactions and design a sampling plan for substantive testing.

BApply analytical procedures to areas that might be impacted by possible fraudulent activities.

CInterview employees to identify areas where the fraud could be occurring.

DPlan detailed tests of the areas that have the highest dollar amount of transactions.

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Question: 4

A production manager for a moderate sized manufacturing company began ordering excessive raw materials and had them delivered to a wholesale company that the manager was running as a separate business. The manager falsified receiving documents and approved the invoices for payment. Which of the following audit procedures would most likely detect this fraud?

ASelect a sample of cash disbursements and compare to purchase orders, receiving reports, invoices, and check copies.

BSelect a sample of cash disbursements and confirm the amount purchased, purchase price, and date of shipment with the vendors.

CObserve the receiving dock and count materials received; compare the counts to receiving reports completed by receiving personnel.

DPerform analytical tests, comparing production, materials purchased, and raw materials inventory levels; investigate any differences.

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Question: 5

During the course of a bank audit, an auditor discovers that one loan officer has approved loans to a number of related but separate organizations, in violation of regulatory policies. The loan officer indicated that it was an oversight and would not happen again. However, the auditor believes that the action may have been intentional because the loan officer is a relative of one of the primary owners of the corporate group that controls the related organizations. The auditor should

AInform management of the conflict of interest and the violation of the regulatory requirements and suggest further investigation.

BReport the violation to the regulatory agency because it constitutes a significant breakdown of the bank's control structure.

CNot report the violation if the loan officer agrees to take corrective action.

DExpand the audit work to determine if there may be fraudulent activity on the part of the loan officer and report the findings to management when the followup investigation is complete.

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IIA IIA-CIA-Part2 Quiz:216 Topic:9 Questions:1076-1080