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Certified Internal Auditor Exam Questions 381–385 (page: 78)

When performing a quality audit engagement in a factory, an internal auditor should first review

An auditor evaluating excessive product rejection rates should investigate

I). Communication between sales and production departments on sales returns.
II). Volume of product sales year to date in comparison to prior year to date.
III). Changes in credit ratings of customers versus sales to those customers.
IV). Detailed product scrap accounts and accumulations.

An internal audit activity is participating in the due diligence work for an acquisition that a company is considering. One engagement objective is to determine if the acquisition's accounts payable contain all outstanding liabilities. Which of the following audit procedures would not be relevant for this objective?

A company has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly accounting for costs related to contract change orders. Which of the following procedures would be appropriate for testing this suspicion?

I). Verify that the contractor has not charged change orders with costs that have already been billed to the original contract.
II). Determine if the contractor has billed for original contract work that was canceled as a result of change orders.
III). Verify that the change orders were properly approved by management.

As part of an operational audit, an auditor compared records of current inventory with usage during the prior two year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?