IIA-CIA-Part2 Practice Test

Which of the following would be a red flag that indicates the possibility of inventory fraud?
I. The controller has assumed responsibility for approving all payments to certain vendors.
II. The controller has continuously delayed installation of a new accounts payable system, despite
a corporate directive to implement it.
III. Sales commissions are not consistent with the organization's increased levels of sales.
IV. Payments to certain vendors are supported by copies of receiving memos, rather than
originals.

A.

I and II only

B.

 II and III only

C.

I, II, and IV only

D.

I, III, and IV only

During an operational audit of a chain of pizza delivery stores, an auditor determined that cold
pizzas were causing customer dissatisfaction. A review of oven calibration records for the last six
months revealed that adjustments were made on over 40 percent of the ovens. Based on this, the
auditor:

A.

Has enough evidence to conclude that improperly functioning ovens are the cause.

B.

Needs to conduct further inquiries and reviews to determine the impact of the oven variations
on the pizza temperature.

C.

Has enough evidence to recommend the replacement of some of the ovens.

D.

Must search for another cause since approximately 60 percent of the ovens did not require
adjustment.

When assessing the risk associated with an activity, an internal auditor should:

A.

Determine how the risk should best be managed.

B.

Provide assurance on the management of the risk.

C.

Modify the risk management process based on risk exposures.

D.

Design controls to mitigate the identified risks.

Which of the following procedures would provide the best evidence of the effectiveness of a creditgranting
function?

A.

Observe the process.

B.

Review the trend in receivables write-offs.

C.

Ask the credit manager about the effectiveness of the function.

D.

Check for evidence of credit approval on a sample of customer orders.

The most effective way for internal auditors to enhance the reliability of computerized financial and
operating information is by:

A.

Determining if controls over record keeping and reporting are adequate and effective.

B.

Reviewing data provided by information systems to test compliance with external requirements.

C.

Determining if information systems provide management with timely information.

D.

Determining if information systems provide complete information.