Question 1

Which of the following internal control weaknesses would an auditor most likely detect while reviewing a flowchart that depicts the purchasing function of an organization?

Options :

A : Payments to suppliers are made before goods are received.

B : Payments for goods received have not been authorized at the appropriate level.

C : Purchasing policies have not been updated.

D : The organization is not taking advantage of quantity discounts available from its suppliers.

Answer: A

Question 2

To determine the sufficiency of information regarding interpretation of a contract, an internal auditor uses

Options :

A : Logical relationships between information and issues.

B : The best obtainable information.

C : Objective evaluations.

D : Subjective judgments.

Answer: C

Question 3

During engagement planning, which of the following would provide an internal auditor with a sufficient understanding of the process being audited?

Options :

A : The mission, vision, and strategic objectives of the organization.

B : Management-s opinion on the thoroughness of a previous internal audit of the same process.

C : The objectives and risk management of the process.

Answer: C

Question 4

Which is the least effective form of risk management?

Options :

A : Systems-based detective control.

B : Systems-based preventive control.

C : People-based preventive control.

D : People-based detective control.

Answer: D

Question 5

A retail store uses a computerized perpetual inventory system with annual physical counts. The best approach for determining whether item counts in the perpetual inventory records are accurate at interim dates is to use generalized audit software to

Options :

A : Simulate inventory transactions between physical inventory counts taken annually.

B : Compare beginning and ending perpetual inventory counts after adjustment for sales and replenishments.

C : Generate stratified random samples of items for manual counting and compare counts to perpetual inventory records.

D : Compute revised item count values by adjusting existing counts for spoilage and shrinkage.

Answer: C

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