Which sampling plan requires no additional sampling once the first error is found?

A.

 Stratified sampling.

B.

 Attributes sampling.

C.

Stop-or-go sampling.

D.

Discovery sampling.

After partially completing an internal control review of the accounts payable department, an auditor
suspects that some type of fraud has occurred. To ascertain whether the fraud is present, the best
sampling approach would be to usE.

A.

Simple random sampling to select a sample of vouchers processed by the department during
the past year.

B.

Probability-proportional-to-size sampling to select a sample of vouchers processed by the
department during the past year.

C.

Discovery sampling to select a sample of vouchers processed by the department during the
past year.

D.

Judgmental sampling to select a sample of vouchers processed by clerks who were identified
by the department manager as acting suspiciously.

Which of the following processes real-transaction data through auditor-developed test programs?

A.

 Generalized audit software.

B.

Tracing.

C.

Parallel simulation.

D.

Mapping.

Which of the following would provide the best audit evidence regarding the effectiveness of an
applied research department?

A.

Develop a cost-per-product analysis for products developed over the past five years.

B.

Develop a report on revenue generated by or cost savings directly attributable to newly
developed products.

C.

Compare research as a percentage of revenue between this company and all major
competitors in the same industry.

D.

Compare the number of this year's new product developments to the number of new product
developments for the past five years

A retail company uses a computer program that matches electronic vendor invoices with the
applicable purchase orders and receiving information, which are also maintained electronically.
If an invoice does not match the other items within predefined ranges, a report is generated and
sent to the accounts payable department for further investigation. All of the applicable documents
are electronically marked, cross-referenced, and retained in open files. Both an integrated test
facility and a systems control audit review file (SCARF) have been included in the system.
An auditor wants to determine the extent to which items are not matched at year end and to
investigate the potential causes of the unmatched items. Which of the following audit procedures
would be most effective in determining the items to investigate?

A.

Use generalized audit software to read the electronically marked unmatched items.

B.

Use generalized audit software to read the purchase orders and trace to applicable receiving
and vendor invoice files.

C.

Use the SCARF to identify unusual items. Select an attributes sample and trace to the
underlying documentation.

D.

Submit test data to identify attributes of unmatched items. Follow up by investigating the
identified attributes

An auditor receives anonymous information that fraud is occurring in the operation being audited,
but no details are given as to the type of fraud or the individuals involved. There are several areas
in which fraud could occur. The auditor should:

A.

Identify the area that has the greatest volume of transactions and design a sampling plan for
substantive testing.

B.

Apply analytical procedures to areas that might be impacted by possible fraudulent activities.

C.

Interview employees to identify areas where the fraud could be occurring.

D.

Plan detailed tests of the areas that have the highest dollar amount of transactions

A company has recently incurred significant cost overruns on one of its construction projects.
Management suspects that these overruns were caused by the contractor improperly accounting
for costs related to contract change orders. Which of the following procedures would be
appropriate for testing this suspicion?
I. Verify that the contractor has not charged change orders with costs that have already been billed
to the original contract.
II. Determine if the contractor has billed for original contract work that was canceled as a result of
change orders.
III. Verify that the change orders were properly approved by management.

A.

I only

B.

III only

C.

I and II only

D.

I and III only

An internal audit activity is participating in the due diligence work for an acquisition that a company
is considering. One engagement objective is to determine if the acquisition's accounts payable
contain all outstanding liabilities. Which of the following audit procedures would not be relevant for
this objective?

A.

Examine supporting documentation of subsequent (after-period) cash disbursements and verify
period of liability.

B.

Send confirmations, including zero-balance accounts, to vendors with whom the company
normally does business.

C.

Select a sample of accounts payable from the accounts payable list and verify the supporting
receiving reports, purchase orders, and invoices.

D.

Trace receiving reports issued before the period end to the related vendor invoices and
accounts payable list.

Which of the following audit steps would be most effective to review proper recording of and
accountability over physical assets?
I. Physically inspect all assets on the organization's property.
II. Select a sample department and physically inspect assets in the department.
III. Select a sample from the organization's records of physical assets and physically locate each
asset.
IV. Identify assets at a sample of locations and trace to the organization's records.

A.

 I only

B.

I and IV only

C.

II and III only

D.

III and IV only

Which of the following audit techniques provides for continuous monitoring and analysis of
computer transactions for detailed auditing?

A.

Integrated test facility.

B.

 Parallel simulation.

C.

Test data.

D.

Embedded audit routines

Access control software on an organization's mainframe computer records detailed information
concerning both successful and unsuccessful log-on attempts to applications. Which of the
following audit tools would be best suited to review the access information that has been
recorded?

A.

Generalized audit software.

B.

Flowcharting.

C.

Integrated test facility.

D.

Test data.

Which of the following would provide the greatest assurance of the accuracy of a computer
program's computation of freight charges for catalog sales?

A.

Use discovery sampling, selecting transactions from invoices which should have freight charges
added to them.

B.

Use either test data or parallel simulation to test the computer application.

C.

Use difference estimation, selecting transactions from invoices which should have freight
charges added to them.

D.

Use generalized audit software to select a monetary-unit sample of invoices that have been
billed to customers.