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AUI3702 EXAM PACK
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Exam of 124 pages for the course The Internal Audit Process: Test of Controls at University of South Africa (AUI3702 EXAM PACK)
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AUI3702 EXAM PACK MCQ.
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. 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.
1.2 Which 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.
1.3 Working 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.
1.4 An 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.
1.5 Which one of the following is an audit objective?
1. Recalculate each month's bank reconciliation.
2. Analyse the pattern of any cash shortages.
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3. Observe the deposit of the day's cash receipts.
4. Evaluate whether cash receipts are adequately safeguarded.
1.6 Which 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.
1.7 Observation 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.
1.8 An 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.
1.9 Which 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.
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3. Aids in the planning, performance and review of audits.
4. Provides the principal support for audit communications.
1.10 Which 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.
1.11 The 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.
1.12 In a final audit report, which attribute should be addressed by the recommendation?
1. Condition.
2. Cause.
3. Effect.
4. Criteria.
1.13 According 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.
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