Question 1

A sales clerk received cash from a customer and pocketed the proceeds. He hid the act by not recording the cash receipt in the system. This is an example of which of the following types of fraud?

Options :

A : Skimming

B : Larceny

C : Lapping

D : Kiting

Answer: A

Question 2

An auditor is using audit software to check inventory accuracy. Which of the following would be an indicator of poor input edit controls?

Options :

A : Negative quantities on hand.

B : Total dollar values of zero for some parts.

C : Alpha characters in the field for order lead time.

D : Reorder levels set too high.

Answer: C

Question 3

When a risk assessment process has been used to construct an audit engagement schedule, which of the following should receive attention first?

Options :

A : The external auditors have requested assistance for their upcoming annual audit.

B : A new accounts payable system is currently undergoing testing by the information technology department.

C : Management has requested an investigation of possible lapping in receivables.

D : The existing accounts payable system has not been audited over the past year.

Answer: C

Question 4

An internal auditor is gathering evidence for an organization's internal audit engagement and requests a sample of vendor invoices from the organization. Which of the following is true regarding the reliability of this evidence?

Options :

A : The invoices have zero reliability.

B : The invoices have low reliability.

C : The invoices have medium reliability.

D : The invoices have high reliability.

Answer: C

Question 5

Which of the following scenarios involving the chief audit executive (CAE) is most likely to impair the independence of the internal audit activity?

Options :

A : The CAE fails to ensure internal audit staff receive training annually.

B : The CAE fails to rotate internal audit staff, resulting in the same internal auditors conducting the same engagements year after year.

C : The CAE reports directly to the organization-s chief financial officer.

D : The CAE reports directly to the board.

Answer: C

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