QUESTION: 209 Exam Topic: 3, Volume C

Which of the following factors would not be considered in determining appropriate follow-up procedures?

The significance of the audit finding.
The effort and cost needed to correct the reported condition.
The availability of funds in the audited department's budget to correct the reported condition.
The potential consequences if the corrective action fails.

Answer(s): C

QUESTION: 210 Exam Topic: 3, Volume C

Persuasive evidence indicates that a member of senior management has been involved in insider trading that would be considered fraudulent. However, the evidence was encountered during an operational audit and is not considered relevant to the audit. Which of the following is the most appropriate action for the chief audit executive to take?

Report the evidence to external legal counsel for investigation. Report the legal counsel findings to management.
Report the evidence to the chairperson of the audit committee and recommend an investigation.
Conduct sufficient audit work to conclude whether fraudulent activity has taken place, then report the findings to the chairperson of the audit committee and to government officials if appropriate action is not taken.
Discontinue audit work associated with the insider trading since it is not relevant to the existing audit.

Answer(s): B

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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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