1.Which of the following statements describes an internal control questionnaire? It
A.Provides detailed evidence regarding the substance of the control system. B.Takes less of the engagement client’s time to complete than other control evaluation devices. C.Requires that the internal auditor be in attendance to properly administer it. D.Provides indirect evidence that might need corroboration.
2.Each individual working paper should, at a minimum, contain
A.An expression of the internal auditor’s overall opinion. B.A tick mark legend.
C.A complete flowchart of the system of internal controls for the area being reviewed. D.A descriptive heading.
3.An internal auditor has set an engagement objective of determining whether mail room staff is fully used. Which of the following engagement techniques will best meet this objective?
A.Inspection of documents.
4.In preparing a sampling plan for an inventory pricing test, which of the following describes an advantage of statistical sampling over nonstatistical sampling?
A.Requires nonquantitative expression of sample results.
B.Provides a quantitative measure of sampling risk.
C.Minimizes nonsampling risk.
D.Reduces the level of tolerable error.
5.When an internal auditor uses dollar-unit statistical sampling to examine the total value of invoices, each invoice
A.Has an equal probability of being selected.
B.Can be represented by no more than one dollar unit.
C.Has an unknown possibility of being selected.
D.Has a probability proportional to its dollar value of being selected.
6.To identify the amount of obsolete inventory that may exist in an organization, an internal auditor probably should collect information using all of the following procedures except
7.Which of the following most completely describes the appropriate content of working papers?
A. Engagement objectives, procedures, and conclusions.
B. Engagement purposes, criteria, techniques, and recommendations. C. Engagement objectives, procedures, observations, conclusions, and recommendations D. Engagement subject, purposes, sampling information, and analysis
8.A final engagement communication should be reviewed and approved by the
A.Engagement client or the person to whom the client reports. B.Internal-auditor-in-charge.
C.Chief audit executive or designee.
D.Chief financial officer.
9. In testing the write-off of a deteriorated piece of equipment, the best information about the condition of the equipment is
A.The equipment manager’s statement regarding condition.
B.Accounting records showing maintenance and repair costs.
C.A physical inspection of the actual piece of equipment.
D.The production department’s equipment downtime report.
10. Confirmations are a highly regarded form of information. Confirmation is most effective in addressing the existence assertion for the
A.Addition of a milling machine to a machine shop.
B.Sale of merchandise during regular course of business.
C.Inventory held on consignment.
D.Granting of a patent for a special process developed by the organization.
11.Due professional care calls for
A.Detailed reviews of all transactions related to a particular function. B.Infallibility and extraordinary performance when the system of internal control is known to be weak. C.Consideration of the possibility of material irregularities during every engagement. D.Testing in sufficient detail to give absolute assurance that noncompliance does not exist.
12.Which of the following procedures is an internal auditor least likely to perform using computer-assisted audit techniques (CAATs) software?
A.Searching records of accounts receivable balances for credit balances. B.Investigating inventory balances for...