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QUESTION 75
Which of the following processes real-transaction data through auditor-developed test programs?
A. Generalized audit software.
B. Tracing.
C. Parallel simul-ation.
D. Mapping.
300-360 exam Correct Answer: C

QUESTION 76
Which of the following would provide the best audit evidence regarding the effectiveness of an applied research department?
A. Develop a cost-per-product analysis for products developed over the past five years.
B. Develop a report on revenue generated by or cost savings directly attributable to newly developed products.
C. Compare research as a percentage of revenue between this company and all major competitors in the same industry.
D. Compare the number of this year’s new product developments to the number of new product developments for the past five years.
Correct Answer: B

QUESTION 77
A retail company uses a computer program that matches electronic vendor invoices with the applicable purchase orders and receiving information, which are also maintained electronically. If an invoice does not match the other items within predefined ranges, a report is generated and sent to the accounts payable department for further investigation. All of the applicable documents are electronically marked, cross-referenced, and retained in open files. Both an integrated test facility and a systems control audit review file (SCARF) have been included in the system.
An auditor wants to determine the extent to which items are not matched at year end and to investigate the potential causes of the unmatched items. Which of the following audit procedures would be most effective in determining the items to investigate?
A. Use generalized audit software to read the electronically marked unmatched items.
B. Use generalized audit software to read the purchase orders and trace to applicable receiving and vendor invoice files.
C. Use the SCARF to identify unusual items. Select an attributes sample and trace to the underlying documentation.
D. Submit test data to identify attributes of unmatched items. Follow up by investigating the identified attributes.
300-360 dumps Correct Answer: A

QUESTION 78
An auditor receives anonymous information that fraud is occurring in the operation being audited, but no details are given as to the type of fraud or the individuals involved. There are several areas in which fraud could occur. The auditor should:
A. Identify the area that has the greatest volume of transactions and design a sampling plan for substantive testing.
B. Apply analytical procedures to areas that might be impacted by possible fraudulent activities.
C. Interview employees to identify areas where the fraud could be occurring.
D. Plan detailed tests of the areas that have the highest dollar amount of transactions.
Correct Answer: B

QUESTION 79
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.
A. I only
B. III only
C. I and II only
D. I and III only
300-360 pdf Correct Answer: C

QUESTION 80
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. Examine supporting documentation of subsequent (after-period) cash disbursements and verify period of liability.
B. Send confirmations, including zero-balance accounts, to vendors with whom the company normally does business.
C. Select a sample of accounts payable from the accounts payable list and verify the supporting receiving reports, purchase orders, and invoices.
D. Trace receiving reports issued before the period end to the related vendor invoices and accounts payable list.

Correct Answer: C

QUESTION 81
Which of the following audit steps would be most effective to review proper recording of and accountability over physical assets?
I. Physically inspect all assets on the organization’s property.
II. Select a sample department and physically inspect assets in the department.
III. Select a sample from the organization’s records of physical assets and physically locate each asset.
IV. Identify assets at a sample of locations and trace to the organization’s records.
A. I only
B. I and IV only
C. II and III only
D. III and IV only
300-360 vce Correct Answer: D

QUESTION 82
Which of the following audit techniques provides for continuous monitoring and analysis of computer transactions for detailed auditing?
A. Integrated test facility.
B. Parallel simul-ation.
C. Test data.
D. Embedded audit routines.
Correct Answer: D

QUESTION 83
Access control software on an organization’s mainframe computer records detailed information concerning both successful and unsuccessful log-on attempts to applications. Which of the following audit tools would be best suited to review the access information that has been recorded?
A. Generalized audit software.
B. Flowcharting.
C. Integrated test facility.
D. Test data.
300-360 exam Correct Answer: A

QUESTION 84
Which of the following would provide the greatest assurance of the accuracy of a computer program’s computation of freight charges for catalog sales?
A. Use discovery sampling, selecting transactions from invoices which should have freight charges added to them.
B. Use either test data or parallel simul-ation to test the computer application.
C. Use difference estimation, selecting transactions from invoices which should have freight charges added to them.
D. Use generalized audit software to select a monetary-unit sample of invoices that have been billed to customers.
Correct Answer: B

QUESTION 85
If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true?
A. The confidence level could not be quantified.

B. The precision would be larger.
C. The projected value of inventory would be less reliable.
D. The risk of incorrect acceptance would be higher.
300-360 dumps Correct Answer: A

QUESTION 86
In a sampling application, the group of items about which the auditor wants to estimate some characteristic is called the.
A. Population.
B. Attribute of interest.
C. Sample.
D. Sampling unit.
Correct Answer: A

QUESTION 87
An internal auditor would most likely use attributes sampling when testing which of the following?
A. Accounts receivable balances.
B. Correct coding of accounts payable disbursement vouchers.
C. Year-end inventory value.
D. Fixed asset book value.
300-360 pdf Correct Answer: B

QUESTION 88
An audit department has received anonymous information that an employee has allegedly been able to steal and cash checks sent to the organization by customers. What is the most efficient way for an auditor to determine how this type of fraud could occur and who might be the perpetrator?
A. Confirm accounts receivable.
B. Confirm accounts payable.
C. Review the endorsements and banks of deposit on customers’ canceled checks.
D. Flowchart and analyze key controls in the cash receipts process.
Correct Answer: D

QUESTION 89
If an auditor expects to find numerous discrepancies between recorded values and audited values of sample selections, which sampling technique would be most appropriate?
A. Attributes sampling.
B. Probability-proportional-to-size sampling.
C. Difference estimation sampling.
D. Discovery sampling.
300-360 vce Correct Answer: C

QUESTION 90
During an audit of a retail organization, an internal auditor found a scheme in which the warehouse director and the purchasing agent diverted approximately $500,000 of goods to their own warehouse, then sold the goods to third parties. The fraud was not found earlier since the warehouse director updated the perpetual inventory records and then forwarded receiving reports to the accounts payable department for processing. Which of the following procedures would have most likely led to the discovery of the missing materials and the fraud?
A. Select a random sample of receiving reports and trace to the recording in the perpetual inventory records. Note differences and investigate by type of product.
B. Select a random sample of purchase orders and trace to receiving reports and to the records in the accounts payable department.
C. Take an annual physical inventory, reconciling amounts with the perpetual inventory records. Note the pattern of differences and investigate.
D. Select a random sample of sales invoices and trace to the perpetual inventory records to see if inventory was on hand. Investigate any differences.
Correct Answer: C

QUESTION 91
Which of the following factors would increase the confidence level in a variables sampling plan?
I. A larger sample size.
II. A stratified sample.
III. A larger standard deviation.
A. I and II only
B. I and III only
C. II and III only
D. I, II, and III
300-360 exam Correct Answer: A

QUESTION 92
If an auditor is sampling to test compliance with a particular company policy, which of the following factors should not affect the allowable level of sampling risk?
A. The experience and knowledge of the auditor.
B. The adverse consequences of noncompliance.
C. The acceptable level of risk of making an incorrect audit conclusion.
D. The cost of performing auditing procedures on sample selections.
Correct Answer: A

QUESTION 93
Which of the following describes an internal auditor’s responsibilities to include audit procedures to detect fraud in audits of a multinational organization?
A. International Accounting Standards require the internal auditor to include audit procedures which would detect fraud if it would cause a material misrepresentation of the financial statements.
B. Internal auditors do not have any specific responsibilities with respect to including fraud- related audit procedures.
C. Proper audit procedures, when carried out with due professional care, will guarantee that fraud, if present, will be detected.
D. If significant control weaknesses are detected, additional tests should be directed toward other indicators of fraud.
300-360 dumps Correct Answer: D

QUESTION 94
An appliance repair company is considering relocating the center that houses its service vehicles. An internal auditor wants to determine the potential reduction in average miles driven by the service vehicles if the center is relocated. Which of the following statistical sampling methods would be most appropriate for this test?
A. Attributes sampling.
B. Discovery sampling.

C. Probability-proportional-to-size sampling.
D. Mean-per-unit sampling.
Correct Answer: D

300-360 dumps

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