2014 S1 A1
1.1 Which one of the following types of audit tests would be the most persuasive if an internal auditor wanted assurance of the existence of inventory stored in a warehouse?
1. .
1.2 Which one of the following is the best source for an internal audit team to use in identifying commo...
which one of the following types of audit tests would be the most persuasive if an internal auditor wanted assurance of the existence of inventory stored in a warehouse
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University Of South Africa
AUI 3702 (AUI3702)
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2014 S1 A1
1.1Which one of the following types of audit tests would be the most
persuasive if an internal auditor wanted assurance of the existence of
inventory stored in a warehouse?
1. Physically inspecting the inventory in the warehouse.
2. Obtaining written confirmation from management as to the existence of the
inventory.
3. Examination of the warehouse receipts contained in the auditee's records.
4. Examination of the shipping documents supporting recorded transfers
to and from the warehouse.
1.2Which one of the following is the best source for an internal audit
team to use in identifying common external risks faced by a company?
1. Questionnaires.
2. Current research reported in professional journals and textbooks.
3. Flowcharts.
4. Review lists or reminder lists.
1.3Working papers should include …
1. All working papers prepared during a previous audit.
2. Documentation substantiating the examination and evaluation of the adequacy
and effectiveness of the system of internal control.
3. Copies of all procedures that were reviewed during the internal audit.
4. Copies of all source documents examined in the course of the internal
audit.
1.4An internal auditor found that the supervisor does not properly approve
employee time records in one department. Which one of the following errors
can result from this?
1. Duplicate pay cheques might be issued.
2. The wrong hourly rate could be used to calculate gross wages.
3. Employees might be paid for hours they did not work.
4. Payroll cheques might not be distributed to the appropriate payees.
1.5Which one of the following is an audit objective?
1. Recalculate each month's bank reconciliation.
2. Analyse the pattern of any cash shortages.
, 3. Observe the deposit of the day's cash receipts.
4. Evaluate whether cash receipts are adequately safeguarded.
1.6Which of the following conduct violates the integrity principle of the Code of
Ethics?
1. The internal auditors perform a detailed risk assessment and identify the
key controls with regard to credit sales before they decided on the tests to
be performed.
2. An internal auditor is assigned to an audit of controls in the
procurement section, which is headed by his father.
3. While auditing the controls over wage pay-outs, an auditor finds that
some controls have been circumvented. She discusses her finding of a
possible fraud with her colleague in the canteen over lunch.
4. The internal auditor uses an unrevised audit programme, used three years ago,
to conduct an organisation-wide audit on credit sales.
1.7Observation is considered a reliable audit procedure, but one that is limited
in usefulness. However, it is used in a number of different engagement
situations. Which of the following statements is true regarding observation as an
engagement technique?
1. It is the most effective audit method to use in filling out
internal control questionnaires.
2. It is the most persuasive technique for determining if fraud has occurred.
3. It is rarely sufficient to satisfy any assertion other than existence.
4. It is the most persuasive methodology to learn how transactions are really
processed during the period under review.
1.8An internal auditor has set an engagement objective of determining
whether mail room staff is fully productive. Which of the following engagement
techniques will best meet this objective?
1. Inquiry.
2. Observation.
3. Analytical review entailing comparison between this mail room staff‘s
productivity levels with similar organisations.
4. Inspection of documents.
1.9Which of the following does not describe one of the functions of the
audit working papers?
1. Facilitates third-party reviews.
2. Aids in the professional development of the operating staff.
, 3. Aids in the planning, performance and review of audits.
4. Provides the principal support for audit communications.
1.10Which of the following are elements included in the control environment
described in the COSO internal control framework?
1. Integrity and ethical values, management‘s philosophy and operating style,
and human policies.
2. Organisational structure, commitment to competence and planning.
3. Competence of personnel, backup facilities, laws and regulations.
4. Risk assessment, assignment of responsibility and human resource
practices.
1.11The policies and procedures helping to ensure that management
directives are executed and actions are taken to address risks to the
achievement of objectives describes...
1. Control activities.
2. Risk assessments.
3. Control environments.
4. Monitoring.
1.12In a final audit report, which attribute should be addressed by the
recommendation?
1. Condition.
2. Cause.
3. Effect.
4. Criteria.
1.13According to the IIA Standards, final engagement communication should be
distributed to those members of the organisation who are able to ensure that
engagement results are given due consideration. For higher-level members of
the organisation, that requirement can be usually satisfied with...
1. Oral reports.
2. Interim reports.
3. Summary reports
4. Final written reports only.
, 1.14Which option best describes why, during an internal audit assignment,
an internal auditor compares the inventory turnover rate of a company
with established industry standards?
1. To evaluate the accuracy of internal financial reports of the company.
2. To test the company's controls designed to safeguard assets.
3. To assess the reasonableness of the disclosed performance (profits) of
the company and to determine where additional audit work may be
needed.
4. To determine whether the company is complying with established
procedures regarding inventory levels.
1.15An internal auditor has set an audit objective of determining whether all
cash receipts are deposited daily. To achieve this objective, the internal auditor
interviewed the supervisor, who assured him that all cash receipts are deposited
as soon as is reasonably possible. The assurance of the supervisor can be used
as evidence that is...
1. Sufficient but not reliable or relevant.
2. Sufficient, reliable and relevant.
3. Not sufficient, reliable or relevant.
4. Relevant but not sufficient or reliable.
1.16The identification of damaged and obsolete inventory is important when
valuing inventory. The best auditing procedure to discover damaged
inventory included in closing inventory is to...
1. Compare the physical quantities of slow-moving items with
corresponding quantities of the previous year.
2. Review management's inventory certificate for accuracy.
3. Test the overall fairness of the inventory values by comparing the
company's inventory turnover ratio with the industry average.
4. Inspect inventory during the physical inventory count.
1.17Statistical sampling differs from other sampling methods in the sense that...
1. An auditor does not have to exercise professional judgement
when applying statistical sampling as he/she must when applying
other sampling methods.
2. Statistical sampling produces representative samples, whereas the other
methods do not.
3. Statistical sampling can deliver absolute assurance, which is not possible
with other sampling methods.
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