Chapter 11

Which of the following is true?

• Continuous monitoring is the CAE's responsibility.

• If a control breakdown is identified through continuous auditing, it should be reported to management on a timely basis.

• Data analytic technologies cannot be used for substantive testing.

• Continuous auditing routines developed by internal auditors should not be shared with management

Which of the following is/are barriers to widespread use of data analytics by internal audit functions?

I. The scope of the intended use of data analytics is not well defined.

II. The amount of time required to clean and prepare data for analysis.

III. The extensive programing skills required to perform data analytics.

IV. Not understanding the data to be analyzed (its source, context, use, and meaning).

• II and III only

• I and IV only

• I, II, and IV only.

• I, II, III, and IV.

Which of the following is not typically a barrier to internal auditors using data analytics in achieving the engagement objective?

• Knowing what data exists and where to find it.

• Poorly defining the scope of the intended use of data analytics.

• Data analytic software is limited by the number of records it can process.

• The effort required to cleanse and prepare data for import to the data analytic tool.

Which of the following is the most significant to the internal audit client in providing information related to the future direction and actions that can improve the operation of the organization?

• Descriptive.

• Diagnostic

• Predictive

• Prescriptive.

Which of the following is the most significant to the internal audit client in providing information related to the future direction and actions that can improve the operation of the organization?

• Descriptive.

• Diagnostic

• Predictive

• Prescriptive.

The primary reason for an internal auditor to use statistical sampling rather than nonstatistical sampling is to:

• Allow the auditor to quantify, and therefore control, the risk of making an incorrect decision based on sample evidence.

• Obtain a smaller sample than would be required if nonstatistical sampling were used.

• Reduce the problems associated with the auditor's judgment concerning the competency of the evidence gathered when nonstatistical sampling is used.

• Obtain a sample more representative of the population than would be obtained if nonstatistical sampling techniques were used.

Which of the following is an element of sampling risk as opposed to an element of nonsampling risk?

• Determining a sample size that is too small.

• Performing an inappropriate audit procedure.

• Failing to detect a control deviation.

• Forgetting to perform a specified audit procedure.

For which of the following would an internal auditor most likely use attribute sampling?

• Determining whether the year-end inventory balance is overstated.

• Selecting fixed asset additions to inspect.

• Choosing inventory items to test count.

• Inspecting employee time cards for proper approval.

If all other factors specified in an attribute sampling plan remain constant, changing the expected population deviation rate from 1 percent to 2 percent and changing the tolerable deviation rate from 7 percent to 6 percent would cause the required sample size to:

• Increase

• Decrease

• Remain the same

• Change by 2 percent

An internal auditor selects a sample of sales invoices and matches them to shipping documents. This procedure most directly addresses which of the following assertions?

• All shipments to customers are recorded as receivables.

• All billed sales are for goods shipped to customers.

• All recorded receivables represent goods shipped to customers.

• All shipments to customers are billed.