[Free] Download New Updated (October 2016) IIA IIA-CIA-Part2 Real Exam 121-130

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QUESTION 121

What is the primary factor that determines the depth and breadth of audit follow-up?

 

A.

The engagement client’s written response to the audit findings.

B.

The auditor’s assessment of risk associated with the audit findings.

C.

The auditor’s assessment of personnel responsible for correcting audit findings.

D.

The availability of audit personnel and financial resources.

 

Correct Answer: B

 

 

QUESTION 122

Which of the following is the first step in the process where auditors and clients work together to evaluate the clients’ system of internal control?

 

A.

Assess risks.

B.

Develop questionnaires.

C.

Identify and assess controls.

D.

Identify objectives.

 

Correct Answer: D

 

 

QUESTION 123

Which of the following would cause a company’s accounts receivable turnover ratio to decrease steadily over a three-year period?

 

A.

An increase in the discount offered for early payment.

B.

A more liberal credit policy.

C.

Invoices provided on a weekly rather than a monthly basis.

D.

Increased cash sales.

 

Correct Answer: B

 

 

QUESTION 124

When interrogating an individual who is suspected of fraud, it is appropriate to:

 

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Tell the individual that any information disclosed in the interrogation will not be disclosed outside of the company.

B.

Start the interview with questions to which the interviewer already knows the answer.

C.

Discontinue questioning once the individual has confessed to the fraud.

D.

Prepare a list of questions prior to the interrogation and strictly adhere to the list.

 

Correct Answer: B

 

 

QUESTION 125

When interviewing an individual suspected of fraud, what type of questions would be asked after the introductory questions?

 

A.

Informational questions.

B.

Admission-seeking questions.

C.

Assessment questions.

D.

Closing questions.

 

Correct Answer: A

 

 

QUESTION 126

Which of the following would be the best audit procedure to use to determine if a division’s unusually high sales and gross margin for November and December were the result of fraudulently recorded sales?

 

A.

Trace a sample of shipping documents to related sales invoices to verify proper billing.

B.

Confirm accounts receivable balances with customers.

C.

Compare sales and gross margin totals with those of the previous ten months and the first month of the following year.

D.

Use regression analysis techniques to estimate the sales and cost of goods sold for November and December.

 

Correct Answer: B

 

 

QUESTION 127

Which of the following best defines an engagement conclusion?

 

A.

An auditor’s determination of the cause of an engagement observation.

B.

An auditor’s professional judgment of the situation which was reviewed.

C.

An opinion that must be included in the engagement final communication.

D.

A recommendation for corrective action.

 

Correct Answer: B

 

 

QUESTION 128

At the conclusion of an audit of an organization’s treasury department, a report was issued to the treasurer, chief financial officer, president, and board. Because of the sensitivity of some findings, a follow-up review was performed. The auditor should provide the report of follow-up findings to the.

 

I. Treasurer.

 

II. Chief financial officer.

 

III. President.

 

IV. Board.

 

A.

I and II only

B.

III and IV only

C.

I, II, and III only

D.

I, II, III, and IV.

 

Correct Answer: D

 

 

QUESTION 129

A limitation of using ratio analysis in an audit engagement is that it:

 

A.

Often uses financial information provided by management which has not been reviewed for reliability and validity.

B.

Is an expensive method of testing.

C.

Requires computer software in order to develop meaningful interpretations of data.

D.

Is useful only when comparisons can be made across other industries.

 

Correct Answer: A

 

 

QUESTION 130

Which of the following is the best approach for obtaining feedback from engagement clients regarding the quality of internal audit work?

 

A.

Ask questions during the exit interviews and send copies of the documented responses to the clients.

B.

Call engagement clients after the exit interviews and send copies of the documented responses to the clients.

C.

Distribute questionnaires to selected engagement clients shortly before preparing the internal audit annual activity report.

D.

Provide questionnaires to engagement clients at the beginning of each engagement and request that the clients complete and return them after the engagements.

 

Correct Answer: D

 

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