IIA-CIA-Part2 practice questions, page 21 of 39, with answer review and explanations.
Question 101
Checklists used to assess audit risk have been criticized for all of the following reasons except:
Providing a false sense of security that all relevant factors are addressed.
Inappropriately implying equal weight to each item on the checklist.
Decreasing the uniformity of data acquisition.
Being incapable of translating the experience or sound reasoning intended to be captured by each item on the checklist.
Question 102
A limitation of using ratio analysis in an audit engagement is that it:
Often uses financial information provided by management which has not been reviewed for reliability and validity.
Is an expensive method of testing.
Requires computer software in order to develop meaningful interpretations of data.
Is useful only when comparisons can be made across other industries.
Question 103
Which of the following would cause a company's accounts receivable turnover ratio to decrease steadily over a three-year period?
An increase in the discount offered for early payment.
A more liberal credit policy.
Invoices provided on a weekly rather than a monthly basis.
Increased cash sales.
Question 104
Which of the following would be the best audit procedure to use to determine if a division's unusually high sales and gross margin for November and December were the result of fraudulently recorded sales?
Trace a sample of shipping documents to related sales invoices to verify proper billing.
Confirm accounts receivable balances with customers.
Compare sales and gross margin totals with those of the previous ten months and the first month of the following year.
Use regression analysis techniques to estimate the sales and cost of goods sold for November and December.
Question 105
Which of the following factors could interfere with effective problem solving by an internal auditor? I. Reacting to previous experiences with clients. II. Focusing only on the most likely cause. III. Correcting the symptoms of problems.