CIA-P2_Audit Engagement Quiz

Which engagement-planning tool is general in nature and is used to ensure adequate audit coverage over time?

• The audit activity’s budget.

• The engagement program.

• The audit activity’s charter.

• The long-range schedule.

A chief audit executive (CAE) uses a risk assessment model to establish the annual audit plan. Which of the following would be an appropriate action by the CAE?

• Maintain ongoing dialogue with management and the audit committee.

• Ensure that the schedule of audit priorities remains unchanged.

• Employ only quantitative methods to determine risk weightings.

• Revise the risk assessment and audit priorities as warranted.

When a risk assessment process has been used to construct an audit engagement schedule, which of the following should receive attention first?

• Management has requested an investigation of possible lapping in receivables.

• The existing accounts payable system has not been audited over the past year.

• A new accounts payable system is currently undergoing testing by the information technology department.

• The external auditors have requested assistance for their upcoming annual audit.

Which of the following is the best reason for the chief audit executive to consider the strategic plan in developing the annual audit plan?

• To ensure that the internal audit plan will be approved by senior management.

• To make recommendations to improve the strategic plan.

• To emphasize the importance of the internal audit activity.

• To ensure that the internal audit plan supports the overall business objectives.

In assessing organizational risk in a manufacturing environment, which of the following would have the most long-range impact on the organization?

• Production scheduling.

• Inventory policy.

• Product quality.

• Advertising budget.

If a department outside of the internal audit activity is responsible for reviewing a function or process, the internal auditors should:

• Yield the responsibility for assessing the function or process to the other department.

• Ignore the work of the other department and proceed with an independent audit.

• Reduce the scope of the audit since the work has already been performed by the other department.

• Consider the work of the other department when assessing the function or process.

Who has primary responsibility for providing information to the audit committee on the professional and organizational benefits of coordinating internal audit assurance and consulting activities with other assurance and consulting activities?

• Each assurance and consulting function.

• The external auditor.

• The chief executive officer.

• The chief audit executive.

A company would like to contract for janitorial services for one year with four option years. The specifications require the potential contractor to perform certain cleaning services at specified intervals. Which of the following is the best contract type for this requirement?

• Time-and-materials.

• Fixed-price.

• Cost-reimbursable.

• Indefinite delivery contracts.

Quality control programs employ many tools for problem definition and analysis. A scatter diagram is one of these tools. The objective of a scatter diagram is to:

• Display a population of items for analysis.

• Show frequency distribution in graphic form.

• Divide a universe of data into homogeneous groups.

• Show the vital trend and separate trivial items.

Which of the following is a preventive control?

• Reconciling purchase orders with approvals.

• Placing controls on physical access to inventory.

• Creating an audit trail.

• Reviewing expense accounts for irregularities.