Here you have the best IIA IIA-CIA-Part2 practice exam questions
Which of the following would be a red flag that indicates the possibility of inventory fraud?
I. The controller has assumed responsibility for approving all payments to certain vendors.
II. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.
III. Sales commissions are not consistent with the organization's increased levels of sales.
IV. Payments to certain vendors are supported by copies of receiving memos, rather than originals.
Indicators I, II, and IV are red flags that suggest the possibility of inventory fraud. The controller assuming responsibility for approving all payments to certain vendors (I) and delaying the installation of a new accounts payable system (II) could both point toward individuals trying to manipulate or conceal financial transactions. Payments supported by copies of receiving memos instead of originals (IV) suggest potential falsification or mismanagement of inventory records. While inconsistent sales commissions (III) might indicate other types of financial irregularities, they don’t directly suggest inventory fraud.
During an operational audit of a chain of pizza delivery stores, an auditor determined that cold pizzas were causing customer dissatisfaction. A review of oven calibration records for the last six months revealed that adjustments were made on over 40 percent of the ovens. Based on this, the auditor:
The information provided indicates that adjustments were made on over 40 percent of the ovens, but this alone does not conclusively determine that improperly functioning ovens are the cause of cold pizzas. Further inquiries and reviews are necessary to determine the impact of the oven variations on the pizza temperature and to identify if the ovens are indeed the cause of customer dissatisfaction. More data and analysis are required to draw a concrete conclusion.
When assessing the risk associated with an activity, an internal auditor should:
An internal auditor's primary role when assessing risk is to provide assurance on the management of the risk. It is not the auditor's responsibility to determine how the risk should be managed, modify the risk management process, or design controls to mitigate the risks. These actions fall under the purview of management. Therefore, providing assurance on the effectiveness and adequacy of the management of the risk is the correct answer.
Which of the following procedures would provide the best evidence of the effectiveness of a credit-granting function?
Reviewing the trend in receivables write-offs would provide the best evidence of the effectiveness of a credit-granting function. A decrease in write-offs would indicate that the credit-granting function is effectively assessing creditworthiness and minimizing the risk of bad debts.
The most effective way for internal auditors to enhance the reliability of computerized financial and operating information is by:
The most effective way for internal auditors to enhance the reliability of computerized financial and operating information is by determining if controls over record keeping and reporting are adequate and effective. This approach ensures that the entire process, from data entry to final reporting, is reliable, accurate, and free from bias. Adequate and effective controls encompass completeness, accuracy, timeliness, and compliance with relevant standards, which directly impacts the reliability of the system's output.