To determine if a new computer system is improving the use of a manufacturer's limited facilities in serving the largest number of customers, an auditor should compare.
A. The number of reworked orders and their costs before and after system installation.
B. Inventory and materials handling costs before and after system installation.
C. The number of orders filled and their cycle times before and after system installation.
D. The number of reworked orders and orders filled before and after system installation.
At the beginning of fieldwork in an audit of investments, an internal auditor noted that the interest rate had declined significantly since the engagement work program was created. The auditor should:
A. Proceed with the existing program since this was the original scope of work that was approved.
B. Modify the audit program and proceed with the engagement.
C. Consult with management to verify the interest rate change and proceed with the engagement.
D. Determine the effect of the interest rate change and whether the program should be modified.
In a manufacturing company, which department would be the internal audit activity's most reliable source of information on the controls over minimizing defective goods?
A. Manufacturing.
B. Quality control.
C. Research and development.
D. Inventory management.
Which of the following is least likely to be considered material in an audit of a medium-sized organization?
A. A $1, 000 overstatement of the accrued-vacation payable account.
B. A violation of a government statute.
C. Fraud resulting in a cash loss to the organization.
D. An underpayment to the employee pension fund.
Which of the following items of evidence is most valid to support a finding that a public utility's repair crews are sometimes required to work under unsafe conditions?
A. Videotapes of repair crews working in a situation that is unsafe.
B. Audio taped testimonials from repair crew members who were required to work under unsafe conditions.
C. Reports showing increases in the number of days of sick leave for individuals on repair crews.
D. Written and signed descriptions from repair crew members of the unsafe conditions that they have had to endure.
An internal auditor prepared a workpaper that consisted of a list of employee names and identification numbers as well as the following statement:
"A statistical sample of 40 employee personnel files was selected to verify that they contain all
documents required by company policy 501 (copy attached). No exceptions were noted."
The auditor did not place any audit verification symbols on this workpaper.
Which of the following changes would most improve the auditor's workpaper?
A. Use of audit verification symbols to show that each file was examined.
B. Removal of the employee names to protect their confidentiality.
C. Justification for the sample size.
D. Listing of the actual documents examined for each employee.
Which of the following is not a typical objective of any training plan developed for internal audit activity staff?
A. Consistency.
B. Economy.
C. Quality.
D. Relevance.
When conducting a preliminary survey, which of the following audit activities should an internal auditor complete first?
A. Identify risks and controls intended to prevent associated losses.
B. Write detailed audit procedures.
C. Identify client objectives, goals, and standards.
D. Determine relevant engagement objectives.
Which of the following scenarios would represent the greatest threat to the authority of the internal audit activity (IAA)?
A. A change was implemented requiring the IAA to report administratively to the organization's chief legal counsel rather than the board.
B. Responsibility for risk management processes were removed from the IAA and placed under a newly created chief risk officer.
C. The IAA was denied access to expenditure and budget requirement reports because the reports were considered to be financial administrative matters.
D. An internal auditor was informed by the chief financial officer that client survey results would be unfavorable unless the auditor changed a finding in the report.
An internal auditor in a small broadcasting organization was assigned to review the revenue collection process. The auditor discovered that some checks from three customers were never recorded in the organization's financial records. Which of the following documents would be the least useful for the auditor to verify the finding?
A. Bank statements.
B. Customer confirmation letters.
C. Copies of sales invoices.
D. Copies of deposit slips.
