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Free IIA CIA Exam Braindumps (page: 74)

Page 74 of 427
PDF with 1702 Questions

One of the audit objectives for a manufacturing company is to verify that all rework is reviewed by the production engineer. Which of the following audit procedures would provide the best evidence for meeting this objective?

  1. Trace a sample of entries in the rework log to remedial action taken.
  2. Trace a sample of rework orders to entries in the rework log.
  3. Trace a sample of entries in the review log to rework orders.
  4. Trace a sample of rework orders to entries in the review log.

Answer(s): D



As part of a preliminary survey of the purchasing function, an auditor read the department's policies and procedures manual. The auditor concluded that the manual described the processing steps well and contained an appropriate internal control design. The next engagement objective was to determine the operating effectiveness of internal controls. Which procedure would be most appropriate in meeting this objective?

  1. Prepare a flowchart.
  2. Prepare a system narrative.
  3. Perform a test of controls.
  4. Perform a substantive test.

Answer(s): C



Which of the following would be the most effective method to prevent installation of new equipment that does not meet environmental permit requirements, or to prevent modification of current processes in such a way that they no longer meet permit requirements?

  1. Require that the environmental compliance department perform regular inspections of the manufacturing facility to identify new equipment or process modifications in progress.
  2. Rely on annual inspections by various regulatory agencies to identify equipment or processes that require a permit.
  3. Require that the staff of the environmental compliance department attend monthly safety meetings in different parts of the facility so that they can hear directly from the workers about any changes.
  4. Include the environmental compliance department in the review of proposed process changes and equipment purchases affecting permit requirements.

Answer(s): D



An internal auditor found that the cost of some material installed on capital projects had been transferred to the inventory account because the capital budget had been exceeded. Which of the following would be an appropriate technique for the auditor to use to determine the extent of the problem?

  1. Identify variances between amounts capitalized each month and the capital budget.
  2. Analyze a sample of capital transactions each quarter to detect instances in which installed material was transferred to inventory.
  3. Review all journal entries that transferred costs from capital to inventory accounts.
  4. Compare inventory receipts with debits to the inventory account and investigate discrepancies.

Answer(s): C






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