Qualified Internal Auditor v6.0

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Exam contains 80 questions

Which of the following is an example of intimidation threat to independence of the auditor?

  • A. The audit firm has been involved in maintaining the accounting records, or undertaking valuations that are incorporated in the financial statements
  • B. The audit firm is acting as a legal advocate for the client in litigation
  • C. Xenia Taliotis is an influential finance director of Winner Plc
  • D. The audit firm is working for long time for its client


Answer : C

Which of the following is not a stage of risk management process?

  • A. Identication
  • B. Assessment
  • C. Migration
  • D. Review


Answer : C

The auditor wants to understand the actual flow of data regarding cash processing. The most convincing evidence would be obtained by

  • A. Reviewing the systems flowchart.
  • B. Performing a "walk-through" of the processing and obtaining copies of all documents used.
  • C. Reviewing the programming flowchart for evidence of control procedures placed into the computer programs.
  • D. Interviewing the treasurer.


Answer : B

The internal audit activity evaluates and contributes to the improvement of risk management, control, and governance systems. Which of the following statements is associated with the improvement of governance?

  • A. The internal audit activity should ascertain the extent to which operating and program goals and objectives have been established and conform to those of theorganization.
  • B. The internal audit activity should review operations and programs to ensure consistency withorganizationalvalues.
  • C. The internal audit activity should be free from interference in determining the scope of internal auditing, performing work, and communicating results.
  • D. The internal audit activity should adopt a process to control and assess the overall effectiveness of the quality program.


Answer : B

Which technique is most appropriate for testing the quality of the pre-audit of payment vouchers described in an internal control questionnaire (ICQ)?

  • A. Analysis
  • B. Evaluation
  • C. Verification
  • D. Observation


Answer : C

Which of the following documents would provide the most persuasive evidence concerning the existence and valuation of a receivable?

  • A. A credit approval document supported by the customer's audited financial statements.
  • B. A copy of a sales invoice to the customer in the auditee's records.
  • C. A positive confirmation received directly from the customer.
  • D. A customer's purchase order in the auditee's records related to the credit sale.


Answer : C

What evidence is appropriate to determine that recorded purchase transactions were valid and at the best price?

  • A. Purchase requisitions, journal voucher entries, and bid quotes.
  • B. Purchase requisitions, purchase orders, and bid quotes.
  • C. Receiving reports, purchase orders, and purchase requisitions.
  • D. Purchase orders, receiving reports, and bid quotes.


Answer : D

Which of the following tests can help the auditor to evaluate the adequacy of the company's allowance for doubtful accounts?

  • A. Reconciling the accounts receivable subsidiary ledgers with the control account.
  • B. Preparing an aging analysis.
  • C. Reviewingauthorizationof credit terms.
  • D. Tracing a sample of credit memos to the accounts receivable subsidiary ledger.


Answer : B

In an audit of the procurement system, which of the following procedures would an auditor perform to determine whether competitive bidding procedures were adequate?
I. Bids are solicited based on properly approved requests.
II. A sufficient number of vendors were selected to ensure competition.
III. Incoming bids are first returned to the buyer for control purposes.

  • A. I and III.
  • B. II and III.
  • C. I, II, and III.
  • D. I and II.


Answer : D

During an interview with a data input clerk to discuss acomputerizedsystem used to track employee training requirements and compliance, an auditor identifies a potentially significant weakness in the system.

The auditor should -

  • A. Not mention the weakness, directly or indirectly, to avoid making the clerk uncomfortable.
  • B. Ask indirect questions that will help get more factual information relating to the potential weakness.
  • C. Ask the clerk about the weakness and determine immediately if the finding should be reported.
  • D. Conduct a second interview after determining whether the weakness actually exists.


Answer : B

Working papers serve the following purpose for the internal auditor:

  • A. Provide the auditee a place to make responses to audit recommendations.
  • B. Make the audit report more readable by providing a place to append exhibits.
  • C. Provide the principal evidential support for the internal auditor's report.
  • D. Provide a place to summarise overall audit recommendations.


Answer : C

Which of the following statements conveys negative information in such a way that afavorableresponse from the auditee may still be achieved?

  • A. Your bookkeeper has failed to reconcile the bank statement each month.
  • B. The bank statements have not been reconciled each month.
  • C. Unfortunately, your bookkeeper has not taken the time to reconcile the bank statement each month.
  • D. You have apparently failed to inform your book keeper that the bank statements should be reconciled on a timely basis.


Answer : B

When making a presentation to management, the auditor wants to report findings and to stimulate action.
These objectives are best accomplished by

  • A. Delivering a lecture on the findings.
  • B. Showing a series of slides or overheads that graphically depict the findings; limit verbal commentary.
  • C. Using slides/overheads to support a discussion of major points.
  • D. Handing out copies of the report, asking the participants to read the report, and asking for questions.


Answer : C

During an audit of sales representatives travel expenses, it was discovered that 152 of 200 travel advances issued to sales representatives in the past year exceeded the prescribed maximum amount allowed.
Which of the following statements is a justifiable audit opinion?

  • A. The majority of travel advances in theorganizationexceed the prescribed maximum.
  • B. Travel advances are not controlled in accordance with existing policy.
  • C. The prescribed maximum travel advance is too low.
  • D. 76% of all travel advances exceed the management prescribed maximum.


Answer : B

Due to the small number of staffs, one remote unit's petty cash custodian also had responsibility for the imprest fund checking account reconciliation. The cashier concealed a diversion of funds by altering the beginning balance on the monthly reconciliations sent to the group office.
A possible audit test to detect this would be to

  • A. Compare monthly balances and use change and trend analysis.
  • B. Require additional monitoring by headquarters whenever improper segregation of duties exists at remote units.
  • C. Determine if any employees have high personal debt.
  • D. Determine if any employees are leading expensive lifestyles.


Answer : A

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Exam contains 80 questions

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