Internal Auditing and Systems Controls Paper 4

1

The personnel department receives an edit listing of payroll changes processed at every payroll cycle. If it does not verify the changes processed, the result could be






2

An internal auditor would trace copies of sales invoices to shipping documents in order to determine that






3

After noting some red flags, an internal auditor has an increased awareness that fraud may be present. Which of the following best describes the internal auditor’s responsibility?






4

An internal auditor discovered an error in a receivable due from a major stockholder. The receivable’s balance accounts for less than 1% of the company’s total receivables. Would the auditor be likely to consider the error to be material?






5

In the performance of an internal audit, audit risk is best defined as the risk that an auditor






6

Which of the following statements is(are) correct regarding the deterrence of fraud?
I. The primary means of deterring fraud is through an effective control system initiated by senior management.
II. Internal auditors are responsible for assisting in the deterrence of fraud by examining and evaluating the adequacy of the internal control system.
III. Internal auditors should determine whether communication channels provide management with adequate and reliable information regarding the effectiveness of the control system and the occurrence of unusual transactions.






7

An internal auditor who suspects fraud should






8

During an engagement to review payments under a construction contract with a local firm, the internal auditor found a recurring monthly reimbursement for rent at a local apartment complex. Each reimbursement was authorized by the same project engineer. The internal contract. Discussion with the project engineer could not resolve the matter. The internal auditor should






9

The chief audit executive uncovers a significant fraudulent activity that appears to involve the executive vice president to whom the CAE reports. Which of the following best describes how the CAE should proceed?






10

When conducting fraud investigations, internal auditors should






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