Question 1

An internal auditor has discovered that duplicate payments were made to one vendor Management has recouped the duplicate payments as a corrective action Which of the following describes managements action in this case?

Options :

A : A condition-based action plan

B : A cause-based action plan.

C : A root cause-based action plan.

D : An effect-based action plan.

Answer: D

Question 2

An organization's health-care insurance costs have been rising approximately 10 percent per year for several years Which of the following analytical review procedures would best evaluate the reasonableness of the increase in health-care costs?

Options :

A : Develop a comparison of the costs incurred with similar costs incurred by other organizations

B :

Obtain the government index of health-care costs for the comparable period of time and compare the rate of increase with that of the cost per employee incurred by the organization

C :

Obtain a bid from another health-care administrator to provide the same administrative services as the current health-care administrator

D :

Review all claims and compare with appropriate procedures to ensure that overpayments have not occurred

Answer: B

Question 3

Which of the following statements is true regarding managements use of judgement to design, implement, and conduct internal control

Options :

A :

The use of judgment enhances managements ability to make better decisions about internal control, but cannot guarantee perfect outcomes.

B :

introducing judgment generally diminishes managements ability to make good decisions about internal control

C :

It is inappropriate for management to exercise judgement in areas such as specifying and using suitable accounting principles.

D :

It is inappropriate for management to exercise judgement in assessing whether components are present, functioning, and operating together

Answer: A

Question 4

Which of the following situations is most likely to heighten an internal auditors professional skepticism regarding potential fraud?

Options :

A : A procurement manager does not have the expected academic credentials for his position

B : A salesperson frequently complains about the organization-s policy on sales commissions.

C : The accounts payable supervisor has requested advances against her monthly salary on several occasions

D : A financial accountant is absent from work frequently due to regular medical procedures

Answer: A

Question 5

Which of the following statements is true regarding partnership liquidation?

Options :

A : Operations can continue after the liquidation, if all partners agree.

B : Partnership liquidation ends both the legal and economic life of an entity

C : Partnership liquidation occurs when there is capital deficiency.

D : When a partnership Is liquidated, each partner pays creditors from cash received

Answer: B

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