When forming an opinion on the adequacy of management's systems of internal control, which of the following findings would provide the most reliable assurance to the chief audit executive?During an audit of the hiring process in a law firm, it was discovered that potential employees' credentials were not always confirmed sufficiently. This process remained unchanged at the following audit.During an audit of the accounts payable department, auditors calculated that two percent of accounts were paid past due. This condition persisted at a follow up audit.During an audit of the vehicle fleet of a rental agency, it was determined that at any given time, eight percent of the vehicles were not operational. During the next audit, this figure had increased.During an audit of the cash handling process in a casino, internal audit discovered control deficiencies in the transfer process between the slot machines and the cash counting area. It was corrected immediately.
Company A has a formal comprehensive corporate code of ethics while company B does not.Which of the following statements regarding the existence of the code of ethics in company A can be logically inferred?I. Company A exhibits a higher standard of ethical behavior than does company B.II. Company A has established objective criteria by which an employee's actions can be evaluated.III. The absence of a formal corporate code of ethics in company B would prevent a successful audit of ethical behavior in that company.
In reviewing the appropriateness of the minimum quantity level of inventory established by a department, an auditor would be least likely to consider:
Which of the following techniques could be used to evaluate the effectiveness of changes to the operation of a computer help line?
An internal auditor and engagement client are deadlocked over the auditor's differing opinion with management on the adequacy of access controls for a major system. Which of the following strategies would be the most helpful in resolving this dispute?
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.
