QIA - Qualified Internal Auditor
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Accounts payable schedule verification may include the use of analytical evidence. Which of the following is most appropriately described as analytical evidence?
Comparing the balance on the schedule with the balances of prior years.
A company with 14,344 customers determines that the mean and median accounts receivable balances for the year are $15,412 and $10,382, respectively. From this information, the auditor can conclude that the distribution of the accounts receivable balances is continuous and
During an audit, the internal auditor should consider the following factor(s) in determining the extent to which analytical procedures should be used, Except
Preparation of employee questionnaire policy.
Your assurance firm is auditor of Happy Goods. The audit manager has just become engaged to the managing director's daughter, who he met through a mutual friend. The managing director owns 51% of the shares in Happy Goods. Which of the threat is not there in this case?
Internal auditing is responsible for reporting fraud to senior management or the board when
The incidence of fraud of a material amount has been established to a reasonable certainty.
Internal auditors must exercise due care if they are to meet their responsibilities for fraud detection. Thus, the existence of certain conditions should raise red flags and arouse auditors' professional scepticism concerning possible fraud. Which of the following is most likely to be considered an indication of possible fraud?
Rapid turnover of financial executives.
The following are potential sources of evidence regarding the effectiveness of the division's total quality management program. Assume that, all comparisons are for similar time periods and duration and current items are compared with similar items before the implementation of the total quality management program. The least persuasive evidence would be a comparison of
Employee morale over the two time periods.
Which of the following is an example of intimidation threat to independence of the auditor?
Xenia Taliotis is an influential finance director of Winner Plc
To identify shortages of specific items in an inventory of expensive goods held for retail sale, the most appropriate audit work step is to
Compare physical inventory counts to perpetual records.
The internal auditors of a financial institution are auditing the institution's investing and lending activities. During the last year, the institution has adopted new policies and procedures for monitoring investments and the loan portfolio. The auditors know that the organisation has invested in new types of financial instruments during the year and is heavily involved in the use of financial derivatives to appropriately hedge risks The audit committee has expressed concern that the financial institution has been taking on higher-risk loans in pursuit of short term profit goals. Which of the following audit procedures would provide the least amount of information to address this audit concern?
Perform an analytical review that involves developing a chart to compare interest income plotted over the past ten years.
An audit team has been assigned to review `the customer satisfaction measurement system' that the industrial products division implemented two years ago. This system consists of the division's customer service office conducting an annual mail survey. A survey is sent to 100 purchasing departments randomly selected from all customers who made purchases in the prior 12 months. The survey is three pages long and its 30 questions use a mixture of response modes (e.g., some questions are open-ended, some multiple choice, and others use a response scale). The customer service office mails the survey in September and tabulates the results for questionnaires returned by October 15. Only one mail is sent. If the customer does not return the questionnaire, no follow-up is conducted. When the survey was last conducted, 45 of the questionnaires were not returned. Which of the following is not an advantage of face-to-face interviews over mail surveys?
They are less expensive since mailing costs are avoided.
Which of the following is the best source for an audit team to use to identify common risks faced by a company?
Research reported in professional journals and text books
Which technique is most appropriate for testing the quality of the pre-audit of payment vouchers described in an internal control questionnaire (ICQ)?
During an audit of sales representatives' travel expenses, it was discovered that 152 of 200 travel advances issued to sales representatives in the past year exceeded the prescribed maximum amount allowed. Which of the following statements is a justifiable audit opinion?
Travel advances are not controlled in accordance with existing policy.
An internal auditor would trace copies of sales invoices to shipping documents in order to determine that:
Sales that are billed were also shipped.
An example of an internal non-financial benchmark is
The percent of customer orders delivered on time at the company's most efficient plant becomes the benchmark for the company's other plants.
The appropriate sampling plan to use to identify at least one irregularity, assuming some number of such irregularities exist in a population, and then to discontinue sampling when one irregularity is observed is
Which of the following investigative tools is most effective when large volumes of evidence need to be analyzed?
An internal audit director has noticed that staff auditors are presenting more oral reports to supplement written reports. The best reason for the increased use of oral reports by the auditors is that they
Permit auditors to counter arguments and provide additional information that the audience may require.
An internal auditor found that employees in the maintenance department were not signing their time cards. This situation also existed during the last audit. The auditor should
Include this finding in the current audit report.
In order for internal auditors to be able to recognize potential fraud, they must be aware of the basic characteristics of fraud. Which of the following is not a characteristic of fraud?
Negligence on the part of executive management.
Auditors realize that at times corrective action is not taken even when agreed to by the appropriate parties. This should lead an internal auditor to
Decide the extent of necessary follow-up work.
Which of the following is not an activity of internal audit function?
Confirming that the final result (the sum) is correct
A personnel department is responsible for processing placement agency fees for new hires. A recruiter established some bogus placement agencies and, when interviewing walk-in applicants, the recruiter would list one of the bogus agencies as referring the candidate. A possible means of detection or deterrence is to
Verify new vendors to firms listed in a professional association catalogue and/or verify the vendor name and address through the telephone book.
Which of the following techniques is best for emphasizing a point in a written communication?
Use a short sentence with one idea rather than a longer sentence with several ideas.
Which of the following control procedures would provide the greatest assurance that all donations to a non-profit organization are immediately deposited to the organization's account?
Use a lockbox to receive all donations.
The internal audit activity evaluates and contributes to the improvement of risk management, control, and governance systems. Which of the following statements is associated with the improvement of governance?
The internal audit activity should review operations and programs to ensure consistency withorganizationalvalues.
Which of the following documents would provide the best evidence that a purchase transaction has actually occurred?
Receiving memorandum documenting the receipt of the goods.
Why should organizations require auditees to promptly reply and outline the corrective action that has been implemented on reported deficiencies?
To effect savings as early as possible.
When making a presentation to management, the auditor wants to report findings and to stimulate action. These objectives are best accomplished by
Using slides/overheads to support a discussion of major points.
Which of the following is not a stage of risk management process?
Which of the following audit committee activities would be of the greatest benefit to the internal auditing department?
Support for appropriate follow-up of recommendations made by the internal auditing department.
Which of the following activities is not included in determining the audit schedule?
Audits vary in their degree of objectivity. Of the following, which is likely to be the most objective?
Compliance audit of company's overtime policy.
The auditor wants to understand the actual flow of data regarding cash processing. The most convincing evidence would be obtained by
Performing a "walk-through" of the processing and obtaining copies of all documents used.
The requirements for staffing level, education and training, and audit research should be included in
The annual plan for the internal auditing department.
During the audit of inventories, an internal auditor specified a precision of 5% instead of the 4% contained in the preliminary audit program. What would be the impact of the change in precision?
A decrease in required sample size
An audit team developed a preliminary questionnaire with the following response choices:
Unobtrusive measures or observations.
Management is legally required to prepare a shipping document for all movement of hazardous materials. The document must be filed with bills of lading. Management expects 100% compliance with the procedure. Which of the following sampling approaches would be most appropriate?
In a variables sampling application, which of the following factors will vary directly with a change in confidence level from 90% to 95%?
In order to ensure the proper addition/deletion of authorizations in an operational audit of data access security, an internal auditor would verify that
Access privileges are activated promptly after they areauthorized.
Each individual work paper should, at a minimum, contain
A descriptive heading.
What evidence is appropriate to determine that recorded purchase transactions were valid and at the best price?
Purchase orders, receiving reports, and bid quotes.
In planning a system of internal operating controls, the role of the internal auditor is to
Appraise the effectiveness of the controls.
Reporting to senior management and the board is an important part of the auditor's obligation. Which of the following items is not required to be reported to senior management and/or the board?
Subsequent to the completion of an audit, but prior to the issuance of an audit report, the audit senior in charge of the audit was offered a permanent position in the auditee's department.
Which of the following is a particular activity of internal audit function?
Special investigations, for instance, into suspected fraud
Data gathered in support of an audit conclusion can be rated on a continuum of reliability. The most reliable form of evidence would be an
External document obtained directly from an outside source.
An operational audit is being performed to evaluate the productivity of telephone sales representatives relative to last year. The organization sells two similar products, one of which is priced 20% higher than the other. Prices did not change during the two years subject to the audit, and the gross profit percentage is the same for both products. The sales representatives are paid a base salary plus a commission. Which one of the following items represents the best evidence that the organization's sales representatives are more productive this year than last year?
The revenue per representative is higher this year than last year.
Which of the following statements conveys negative information in such a way that a favorable response from the auditee may still be achieved?
The bank statements have not been reconciled each month.
Which of the following is not an argument for principles-based approach to corporate governance?
Companies do not have the choice of ignoring the rules