IIA IIA-CIA-Part2 Quiz 14 Topic 1 Questions 66-70

Question: 1

During an audit of executive travel, an auditor noted that the president's travel expense reimbursements were approved by an executive secretary who reported to the president. The organization's reimbursement policy requires all travel expense reimbursements to be approved by the traveler's supervisor, but it does not address the president's reimbursements. Which of the following represents the auditor's best recommendation in this situation?

AThe organization's reimbursement policy should be amended to grant the president's executive secretary the authority to approve the president's travel expense reimbursements.

BThe approval policy for executive travel should be considered at the next meeting of the audit committee of the board of directors.

CThe president's travel expense reimbursements should be reviewed and approved by the chief financial officer.

DThe president's noncompliance should be considered immaterial.

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Question: 2

Insurance companies often receive electronic hospitalization claims directly from hospitals. Which of the following control procedures would be most effective in detecting fraud in such an environment?

AUse integrated test facilities to test the accuracy of processing in a manner that is transparent to data processing.

BDevelop monitoring programs to identify unusual types of claims or an unusual number of claims by demographic class for investigation by the claims department.

CUse generalized audit software to match the claimant identification number with a master list of valid policyholders.

DDevelop batch controls over all items received from a particular hospital and process those claims in batches.

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Question: 3

Given the scarcity of internal audit resources, a chief audit executive (CAE) decided not to schedule a follow-up of audit recommendations when developing engagement work schedules. Does the CAE's decision violate the Standards?

ANo, because the Standards do not specify whether follow-up is needed.

BNo, because when there is evidence of sufficient motivation by the client, there is no need for follow-up action.

CYes, because scarcity of resources is not a sufficient reason to omit follow-up action.

DYes, because the Standards require the auditors to determine whether the client has appropriately implemented all of the auditor's recommendations.

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Question: 4

An auditor for a major retail company suspects that inventory fraud is occurring at three stores which have high costs of goods sold. Which of the following audit activities would provide the most persuasive evidence that fraud is occurring?

AUse an integrated test facility (ITF) to compare individual sales transactions with test transactions submitted through the ITF and investigate all differences.

BInterview the three individual store managers to determine if their explanations about the observed differences are the same, and then compare their explanations to that of the section manager.

CSchedule a surprise inventory audit to include a physical inventory and investigate areas of inventory shrinkage.

DSelect a sample of individual store prices and compare them with the sales entered on the cash register for the same items.

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Question: 5

Which of the following procedures would be most helpful in providing additional evidence when an auditor suspects that an unidentified employee is submitting and approving invoices for payment?

AUse generalized audit software to identify invoices from vendors with post office box numbers or other unusual features. Select a sample of those invoices and trace to supporting documents such as receiving reports.

BSelect a sample of payments made during the year and investigate each one for approval.

CSelect a sample of receiving reports representative of the period under investigation and trace to approved payment. Note any items not properly processed.

DSelect a sample of invoices paid during the past month and trace them to appropriate vendor accounts.

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IIA IIA-CIA-Part2 Quiz:14 Topic:1 Questions:66-70