Which of the following data collection strategies systematically tests the effects of various factors
on an outcome?

A.

Content analysis.

B.

 Sampling.

C.

Evaluation synthesis.

D.

Modeling.

Which of the following audit procedures is most suitable for verifying that all sales transactions
have been recorded?

A.

Observation.

B.

Tracing.

C.

Re-computation.

D.

Vouching

Which of the following would be an appropriate and effective control self-assessment approach in
an organization with an authoritative culture? 
I. Facilitated meeting
II. Survey
III. Management-produced analysis

A.

I only

B.

I and III only

C.

II and III only

D.

I, II, and III

A film company determined that income level impacts the number of films that people watch per
month, as shown by the graph below:
The graph indicates that:

A.

A richer person always sees more films than a poorer person.

B.

The number of films seen per month is a linear function of income level.

C.

A 20 percent pay increase is more likely to increase film viewing at lower income levels than at
higher income levels.

D.

A 20 percent pay increase is likely to increase film viewing by a constant amount regardless of
income level.

What does the following scatter gram suggest?

A.

Sales revenue is related to training costs.

B.

The training program is not effective.

C.

Increases in training costs consistently increase sales revenue.

D.

One data point is incorrectly plotted

New credit policies have been implemented in an automated order-entry system to improve the
collection of receivables. Sales management has compiled several examples that show decreased
sales and delayed order entry, and contends that these examples are a direct result of the new
credit-policy constraints. Sales management's data and information provide.

A.

Feedback control data.

B.

Irrelevant and argumentative information.

C.

Evidence that the new credit policies do not meet the stated corporate objective to improve
collections.

D.

A statistically valid conclusion about the impact of the new credit policies on customer goodwill.

If an organization's chief audit executive wants to implement continuous auditing, what is the
appropriate order in which key steps should be undertaken?
I. Identify business applications that require access.
II. Implement steps to continuously assess risks and controls.
III. Define objectives of continuous auditing.
IV. Manage and report results.

A.

III, I, IV, II.

B.

II, I, III, IV.

C.

 III, I, II, IV.

D.

II, III, I, IV.

In which of the following situations would it be most appropriate to employ the services of a
forensic specialist?

A.

Detection of unauthorized changes to source documents.

B.

Review for misapplication of general computer controls over accounts receivable.

C.

Investigation of ghost employees in a large business.

D.

Verification of fixed assets in a manufacturing company

The following is an excerpt from an audit engagement workpaper:
A Company
Accounts Receivable
Date
Objective. To determine if the computer system is correctly recording all accounts receivable
transactions.
Procedures: Judgmental selection of a sample of all accounts receivable balances greater than
$50,000 for positive confirmation of balances.
Conclusion: Based on the results of testing wherein all but three confirmations were returned, the
accounts receivable balance is fairly presented in all material respects.
Which of the following is true regarding the workpaper?

A.

 It is not appropriate to judgmentally select a sample when testing accounts receivable.

B.

A conclusion should be reached only for the results of overall testing, not for individual
procedures.

C.

The audit procedures used are not consistent with the audit objective.

D.

The format of the workpaper does not conform to the standard format for workpapers.

Which of the following trends found on financial reports would most likely indicate a possible
problem?

A.

A material decrease in the receivables turnover.

B.

A material increase in inventory turnover.

C.

A material increase in daily sales compared to total outstanding receivables.

D.

A material increase in the acid-test ratio.

Which of the following situations would best support the decision of a chief audit executive (CAE)
to defer follow-up activity at a branch office until the next audit engagement?

A.

An audit of the branch office is routinely scheduled every three years.

B.

On-site follow-up of a remote branch may not be feasible due to travel costs.

C.

Branch office management states that correction of the audit issue may take longer than
expected.

D.

The CAE and management agree that the corrective action taken to date is sufficient.

When conducting research, which of the following is most important?

A.

Using computer databases or the Internet to find all relevant sources.

B.

Providing documentation of the reference sources.

C.

Presenting only those facts that support the conclusion.

D.

Presenting all contrary views to balance the opinion.