IIA IIA-CIA-Part2 Quiz 113 Topic 7 Questions 561-565

Question: 1

In an assurance engagement of treasury operations, an internal auditor is required to consider all of the following issues except

AThe audit committee has requested assurance on the treasury department's compliance with a new policy on use of financial instruments.

BTreasury management has not instituted any risk management policies.

CDue to the recent sale of a division, the amount of cash and marketable securities managed by the treasury department has increased by 350 percent.

DThe external auditors have indicated some difficulties in obtaining account confirmations.

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Question: 2

To better monitor the performance of operating management, executive management has requested that the internal auditors examine interim financial statements that are prepared for internal use only. Although interim financial statements have been prepared for several years, this will be the first time that the internal auditors have been involved. The primary reason for this request was that executive management was surprised at the lower than-anticipated net profit eventually reflected in last year's audited financial statements. Earnings had been artificially manipulated on quarterly financial statements. In their work on this year's interim financial statements, internal auditors are likely to focus on which of the following?

AWhether payables have been accrued properly at the end of the interim period.

BThe timing of revenue recognition and the valuation of inventories.

CWhether accounting estimates are reasonable given past actual results.

DWhether there have been changes in accounting principles that materially affect the financial statements.

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Question: 3

For an upcoming engagement, an internal auditor's objective is to determine whether costs are both documented and reasonable. This is most likely an engagement involving

AAdvertising agency billings.

BAllowance for doubtful accounts.

CAsset disposals.

DAccounts payable.

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Question: 4

The personnel department receives an edit listing of payroll changes processed at every payroll cycle. If it does not verify the changes processed, the result could be

AUndetected errors in payroll rates for new employees.

BInaccurate payroll deductions.

CLabor hours charged to the wrong account in the cost reporting system.

DEmployees not being asked if they want to contribute to the company pension plan.

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Question: 5

One operating department of an organization does not have adequate procedures for inspecting and verifying the quantities of goods received. To evaluate the materiality of this control deficiency, the internal auditor should review the department's

AYear-end inventory balance.

BAnnual inventory purchases.

CYear-end total assets.

DAnnual operating expenses.

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IIA IIA-CIA-Part2 Quiz:113 Topic:7 Questions:561-565