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AUI3702 Multiple choice & answers
- Institution
- University Of South Africa (Unisa)
Multiple choice for AUI3702 plus answers.
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1.1 Which one of the following types of audit tests would be the most persuasive if an internalauditor 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.
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.
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.
1.14 Which 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.
1.15 An 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.
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