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QUESTION: 211 Exam Topic: 3, Volume C

What is the most likely source of information for a detailed schedule of a company's insurance policies in force?

Original journal entries found in the cash disbursements journal, along with supporting checks processed by the bank.
Policies and procedures governing insurance coverage.
The current fiscal year's budget for insurance, together with the beginning balance of the prepaid insurance account.
The files containing insurance policies with various carriers.

Answer(s): D

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QUESTION: 212 Exam Topic: 3, Volume C

Confirmation would be most effective in addressing the existence assertion for:

The addition of a milling machine to a machine shop.
Sales of merchandise during the regular course of business.
Inventory held on consignment.
The granting of a patent for a special process developed by the organization.

Answer(s): C

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QUESTION: 213 Exam Topic: 3, Volume C

In a payroll audit, a staff auditor suspects that signatures on some of the documents being sampled for examination are not authentic. What action should the auditor take before proceeding with the examination?

Suggest to the payroll manager that the suspicious documents should be sent to the organization's security department for forensic review.
Keep the suspicious documents in the workpaper file until the end of the engagement, and then discuss the suspicions with the payroll manager.
Discuss the suspicious documents with payroll staff to seek their views on the authenticity of the signatures.
Review the suspicious documents with the chief audit executive and seek advice concerning further examination.

Answer(s): D

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QUESTION: 214 Exam Topic: 3, Volume C

In evaluating the validity of different types of audit evidence, which of the following conclusions is not correct?

Recomputation, though highly valid, is limited in usefulness due to its limited scope.
The validity of documentary evidence is independent of the effectiveness of the control system in which it was created.
Internally created documentary evidence is considered less valid than externally created documentary evidence.
The validity of confirmations varies directly with the independence of the party receiving the confirmation.

Answer(s): B

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