QUESTION: 257 Exam Topic: 3, Volume C

Production managers for a manufacturing company are authorized to prepare emergency purchase orders for raw materials. These manually prepared orders do not go through the purchasing department and do not require a receiving report. The managers forward the invoice and purchase order to the accounting department for payment. Which of the following internal controls would efficiently prevent abuse of this system?

Institute a company policy requiring rotation of orders among several suppliers.
Require a manual receiving report from the warehouse prior to payment.
Forbid the use of emergency purchase orders.
Review the level of safety stock.

Answer(s): B

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QUESTION: 258 Exam Topic: 3, Volume C

Which of the following is most appropriate when conducting an interview during the course of a fraud investigation?

Schedule the interview well in advance.
Explain the detailed purpose to the interviewee.
Assume that the interviewee is guilty.
Have a witness present during the interview.

Answer(s): D

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QUESTION: 259 Exam Topic: 3, Volume C

Which of the following types of contracts would provide the least incentive for a contractor to achieve economy and efficiency?

Lump-sum contract.
Cost-plus contract.
Unit-price contract.
Indefinite delivery contract.

Answer(s): B

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QUESTION: 260 Exam Topic: 3, Volume C

Which of the following best describes the primary concern of the audit manager upon review of engagement working papers of an auditor?

To ensure adequate control over the custody of working papers is exercised by the auditor.
To ensure that as part of the documentation the auditor collected original documents that can corroborate the audit findings.
To ensure that the work papers create background for subsequent reviews.
To ensure that the audit programs are followed by the auditor.

Answer(s): D

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QUESTION: 257 Exam Topic: 3, Volume C

QUESTION: 258 Exam Topic: 3, Volume C

QUESTION: 259 Exam Topic: 3, Volume C

QUESTION: 260 Exam Topic: 3, Volume C