What characteristic of information is satisfied by an original signed document? A. Sufficiency. A company’s accounts receivable turnover rate decreased from 7.3 to 4.3 over the last 3 years. What is the most likely cause for the decrease? A. An increase in the discount offered for early payment. An internal auditor decides to perform an inventory turnover analysis for both raw materials inventory and finished goods inventory. The analysis would be potentially useful in A. Identifying potential problems in purchasing activities. An internal auditor has set an engagement objective of determining whether all cash receipts are deposited intact daily. To satisfy this objective, the internal auditor interviewed the controller who gave assurances that all cash receipts are deposited as soon as is reasonably possible. As information that can be used to satisfy the stated engagement objective, the controller’s assurances are A. Sufficient, reliable, and relevant. When an auditor performs tests on a computerized inventory file containing over 20,000 line items, that auditor can maintain independence and perform most efficiently by A. Using the systems department’s programmer to write an extraction program. In engagement planning, internal auditors should review all relevant information. Which of the following sources of information would most likely help identify suspected violations of environmental regulations? A. Discussions conducted with the external auditors in coordinating engagement efforts. An internal auditor’s objective is to determine the cause of inventory shortages shown by the physical inventories taken by an independent service organization that used some engagement client personnel. The internal auditor addresses this objective by reviewing the count sheets, inventory printouts, and memos from the last inventory. The source of information and the sufficiency of this information are A. Both external and
internal and sufficient. Insurers may receive hospitalization claims directly from hospitals by computer media; no paper is transmitted from the hospital to the insurer. Which of the following controls is most effective in detecting fraud in such an environment? A. Use integrated test facilities to test the correctness of processing in a manner that is
transparent to data processing. Ordinarily, What source of information should most affect the internal auditor’s conclusions? A. Informal. To verify the proper value of costs charged to real property records for improvements to the property, the best source of information is A. A letter signed by the real property manager asserting the propriety of costs incurred. 11 While testing a division’s compliance with company affirmative-action policies, an auditor found that A. Insufficient evidence exists of compliance with affirmative-action policies. Which of the following cannot be performed by an auditor using generalized audit software (GAS)? A. Correcting erroneous data elements, making them suitable for audit testwork. An organization provides credit cards to selected employees for business use. The credit card company provides a computer file of all transactions by employees of the organization. An auditor plans to use generalized audit software (GAS) to select relevant transactions for testing. Which of the following would not be readily identified using GAS? A. Suppliers used by each cardholder. 14 Which result of an analytical procedure suggests the existence of obsolete merchandise? A. Decrease in the ratio of inventory to accounts payable. The most conclusive information to support supplier account balances is obtained by A. Reviewing the vendor statements obtained from the accounts payable clerk. |